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3 Cards in this Set
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concentration ratio
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Example: Concentration ratio
The beverage industry is composed of 5 firms with market shares as follows: Co A has 30% market share Co B has 30% market share Co C has 20% market share Co D has 15% market share Co E has 5% market share. Calculate the concentration ratio for the beverage industry. Answer: The three-firm concentration ratio fro the beverage industry is 80% (30% + 30% + 20%). |
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Herfindahl Index
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The Herfindahl index is simply the sum of the squares of the market shares for each firm within the industry and is always less than one.
Co A has 30% market share Co B has 30% market share Co C has 20% market share Co D has 15% market share Co E has 5% market share. Calculate the Herfindahl Index for the beverage industry. Answer: The Hefindahl Index is calculated as follows: (0.30)2 + (0.30)2 + (0.20)2 + (0.15)2 + (0.05)2 = 0.245 |
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How is PE and Dividend Payout Related
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Price / Earnings ratio = (Dividend Payout Ratio) / (k − g),
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