requires a short-term ROI target of 15%. This a fair measure of divisional profitability for a new project for Diversified Electronics. The new product is in a growth market and can expect a 10% increase in price every year which applies to price and costs except depreciation and land. RULES There are four ways to measure divisional performance – divisional income, Return on Investment (ROI), Residual Income, and Economic Value Add (EVA). Diversified Electronics currently uses the ROI measure. ROI
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gain a competitive advantage’. This essay will firstly examine the characteristics of the resources which are the basis of a competitive advantage, then analyze the isolation mechanism which help to maintain firms’ competitive advantage. Finally limitations of this theory will be discussed. According to McGahan and Porter’s research, 31.71% of the factor influencing business profitability is suggested to be firms’ resources and capabilities. These resources and capabilities have to be heterogeneous
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* Low – when strong economies of scale and learning effects are present * Low – if industry has strong capital requirements * Low – strong product differentiation * Bargaining Power of Suppliers * High – if costs of switching suppliers is high * High
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Financial Statement Development and Analysis Part A Three (3) of the financial disclosures that would provide evidence as to whether Coca-Cola is achieving its objective are: Coca-Cola’s mission declares the company purpose and standards by which Coca-Cola will operate. Coca-Cola’s roadmap starts with a mission that is lasting. The basic tasks of Coca-Cola are: to refresh the word, to inspire moments of optimism and happiness and to create
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1. Calculation of WACC of a Multi-Division Corporation 2. Sources of Data and their limitation 3. Use of CAPM, Cost of Equity, Effect of Leverage on the Ce, WACC 4. Use of data for comparable to estimate asset betas for division-specific cost of capital 5. Biases and Limitations No financial modeling. In the previous years they would include WACC as part of case study 3 – Now it has been changed to 2 – without any actual financial statements. No excel modeling. Focused on how to address
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Abstract | | The use of historical accounting provides simplified but verifiable information to users of accounting statements. One argument to historical values is that they do not provide true values. This had led to a push to use fair value accounting methods for financial statements. While fair values methods may more accurately reflect true values, scandals such as Enron have brought to light the tradeoffs associated with using this method over historical costs. John P. Glynn, a partner
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accounting period is the time that the information is prepared and reported on a quarterly or annually bases. The accounting principles consist of four basic parts they are the historical cost principle, matching principle, revenue recognition principle, and full disclosure principle. When dealing with historical cost principle the assets are altered if changes occur in the market value but no adjustments are made. Matching principles compare the revenues and expenses that was earned and occurred
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Discussion of the issues (2.5) * Limitation of historical cost accounting Historical cost accounting: assets are recorded at the amounts paid/ received at acquisition Problem: +) inflation, +) increase in asset values are not reflected in financial statements (wearing out of assets, increase in market value) Advantage: +) objective method: documentary evidence to prove the purchase price of an asset, or amounts paid as expense. +) costs can easily be verified. * Alternative
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Cost Accounting : An Introduction MODULE - 6B Elementary Cost Accounting 27 COST ACCOUNTING : AN INTRODUCTION After passing your senior secondary examination, if you set up a small manufacturing unit, say manufacturing of packing boxes, a problem will arise what price of each box you should quote to the buyer. Many factors are considered while fixing the price of a product/item such as competitors’ price etc. One of the basic factors is the cost of its production. Cost is essential not only
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MODULE - 6B Elementary Cost Accounting Notes 95 Cost Accounting : An Introduction ACCOUNTANCY After passing your senior secondary examination, if you set up a small manufacturing unit, say manufacturing of packing boxes, a problem will arise what price of each box you should quote to the buyer. Many factors are considered while fixing the price of a product/item such as competitors’ price etc. One of the basic factors is the cost of its production. Cost is essential not only to fix price
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