An equity manager conducted a stock screen on 5,000 U.S. stocks that comprise her investment universe. The results of the screen are presented in the table below.
| Criterion | % of Stocks Meeting Criterion |
| Price per share/Sales per share <1.25 | 35.0 |
| Total asset/Equity ≤ 2.5 | 48.2 |
| Dividends >0 | 58.6 |
| Consensus forecast EPS >0 | 75.0 |
| Meeting all 4 criteria simultaneously | 10.8 |
If all the criteria were completely independent of each other, the number of stocks meeting all four criteria would be closest to:
Discuss the use of financial statement analysis in screening for potential equity investments, If the criteria are independent of one another, the probability that all will occur is the product of the individual probabilities (Multiplication Rule for Independent Events), i.e., 0.35 × 0.482 × 0.586 × 0.75 = 0.074, or 7.4%, which would produce 371 meeting the criteria, i.e., 7.4% × 5,000.