Series 79 practice questionmediumIndustry/Sector Analysis
Why do bankers care about same-store sales when analyzing a retail chain?
- AIt measures retailer tax expense
- BIt replaces EBITDA in valuation
- CIt determines whether debt is secured
- DIt isolates organic performance at existing locations without the distortion of newly opened stores✓ Correct answer
Explanation
Why D — It isolates organic performance at existing locations without the distortion of newly opened stores
It isolates organic performance at existing locations without the distortion of newly opened stores Same-store sales strip out the growth effect from opening new units and therefore show the health of the core store base. That makes it easier to distinguish true demand trends from footprint expansion.
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