Share
Explore BrainMass

Stock Market: CFA Examination Level II

See below for the details. I need help with anazlying Table 1 (13.1).

----------
Chapter 13, problem 8:

CFA Examination Level II: As a securities analyst, you have been asked to review a valuations of a closely held business-Wigwam Autoparts Heaven, Inc. (WAH), prepared by the Red Rocks Group (RRG). You are to give an opinion by analyzing each part of the valuation. WAH's sole business is automotive parts retailing.
The RRG valuation includes a section called "Analysis of the Retail Auto parts Industry", based completely on the data in Table 1 and the following additional information.

*WAH and its principal competitors each operated over 150 stores at years end 1994.
* The average number of stores operated per company engaged in the retail auto parts industry is 5.3.
*The major customer base for auto parts sold in retail stores consists of young owners of old vehicles. These owners of their own automotive maintenance out of economic necessity.

a. One of RRG's conclusions is the WAH and its principal competitors are in the growth stage of their life cycle. Discuss three relevant items of data from Table 1 that supports this conclusion.
b. Another RRG conclusion is the WAH and its principal competitors are in the growth stage of their life cycle.
a. Cite three relevant items of data form Table 13.1 (see attachment) that supports this conclusion.
b. Explain how WAH and its principal competitors can be in a growth stage while their industry as a whole is in the stabilization stage.

-------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
Population 18-29 years old (percentage change)
-1.8% -2.0% -210.0% -140.0% -8.0% -9.0% -110.0% -9.0% -7.0% -30.0%
Number of households with income more than $35000 (percentage change)
6.0% 4.0% 8.0% 4.5% 2.7% 3.1% 1.6% 3.6% 4.2% 2.2%
Number of households with income less than $35000 (percentage change)
3.0% -1.0% 4.9% 2.3% -1.4% 2.5% 1.4% -1.3% 0.6% 0.1%
Number of cars 5-15 years old (percentage change) 0.9% -1.3% -6.0% 1.9% 3.3% 2.4% - 2.3% -2.2% -8.0% 1.6%
Automotive aftermarket industry retail sales (percentage change)
5.7% 1.9% 3.1% 3.7% 4.3% 2.6% 1.3% 0.2% 3.7% 2.4%
Consumer expeinditures on automotive parts and accessories (percentage change)
2.4% 1.8% 2.1% 6.5% 3.6% 9.2% 1.3% 6.2% 6.7% 6.5%
Sales growth of retail auto parts companies with 100 or more stores
17.0% 16.0% 16.5% 14.0% 15.5% 16.8% 12.0% 15.7% 19.0% 16.0%
Market share of retail auto parts companies with 100 or more stores
19.0% 18.5% 18.3% 18.1% 17.0% 17.2% 17.0% 16.9% 15.0% 14.0%
Average operating margin of retail auo parts compaines with 100 or more stores
12.00% 11.80% 11.20% 11.50% 10.60% 10.60% 10.00% 10.40% 9.80% 9.00%
Average operating margin of all retail auto parts compaines
5.50% 5.70% 5.60% 5.80% 6.00% 6.50% 7.00% 7.20% 7.10% 7.20%

Solution Preview

Chapter 13, problem 8:

CFA Examination Level II: As a securities analyst, you have been asked to review a valuations of a closely held business-Wigwam Autoparts Heaven, Inc. (WAH), prepared by the Red Rocks Group (RRG). You are to give an opinion by analyzing each part of the valuation. WAH's sole business is automotive parts retailing.
The RRG valuation includes a section called "Analysis of the Retail Auto parts Industry", based completely on the data in Table 1 and the following additional information.

*WAH and its principal competitors each operated over 150 stores at years end 1994.
* The average number of stores operated per company engaged in the retail auto parts industry is 5.3.
*The major customer base for auto parts sold in retail stores consists of young owners of old vehicles. These owners of their own automotive maintenance out of economic necessity.

a. One of RRG's conclusions is the WAH and its principal competitors are in the growth stage of their life cycle. Discuss three relevant items of data from Table 1 that supports this conclusion.
During the growth stage of the lifecycle WAH and its principal competitors are likely to experience rapid growth of revenue. During this stage as the customers become aware of the product being sold by WAH and its competitors, there is an increase of sales. At this stage of the product lifecycle the price is maintained at a high level to earn a higher percentage of ...

Solution Summary

This answer provides you an excellent discussion on Stock Market: CFA Examination Level II

$2.19