Why EVA is better than ROI (ROCE, ROIC, RONA, ROA) and earnings, operating profit etc. Equity investors should earn on their capital a return far over risk-free interest rate in order to induce and maintain capital in the company Therefore earnings should always be judged against the capital used to produce these earnings Earnings can be easily increased simultaneously worsening the position of shareholders e.g. if more capital is poured into a company although the return on capital is 5% or less
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following theories suggests that firms seek to penetrate new markets over time? a. theory of comparative advantage. b. imperfect markets theory. c. product cycle theory. d. none of these. 6. Which of the following is an example of direct foreign investment? a. exporting to a country. b. establishing licensing arrangements in a country. c. purchasing existing companies in a country. d. investing directly (without brokers) in foreign stocks. 7. According to the text, a disadvantage of licensing is that:
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inability to improve profitability. Their fixed asset turnover and total asset turnover ratios are down. These are two approaches to assess management’s effectiveness in generating sales from investment of assets. The fact that these ratios are lower that prior year means that more investment is required in the generation of sales. The gross profit margin, operating profit margin, and net profit margin, represent the firm’s ability to translate sales dollars into profits. Although
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End of Year: | 0 | 1 | 2 | 3 | 4 | | | | | | | | I. | Investment outlay | | | | | | | Equipment cost | ($200) | | | | | | Installation
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different from the concept of saving as saving refers to the passive use of the money with the safety of principal being the major requirement, on the other hand, investing refers to proactive and a bit aggressive use of the money to earn return on investment. It is never too early to start investing in things which help to earn profit, and by earning that profit it will be easier to do if one gets an early start in life. As a young investor i can remember quite vividly how easy it was for me to invest
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10-year spreads generally was only a few basis points. The pricing difference throws bond-market convention on its head. All things being equal, long-term paper normally commands higher spreads to reflect the greater risk associated with holding investments longer. That started to change in the summer of 2007, when the credit crunch caused bond trading to slow. The benchmark classes of 10-year bonds started trading at slightly tighter spreads than 5-year paper because their larger supply offered more
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for one single large investment. Proposal B is a staged entry that would take place in two stages. Proposal A is for one single investment, ARC would purchase 500 facilities across the nation. Each facility would be renovated and fully equipped to open as a new facility specializing in sports medicine. The estimated average cost per facility is $800,000, since ARC would be purchasing 500 the total estimated cost is $400 million, internal rate of return 20-25%. This investment requires a greater initial
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1. J.M. Smucker's corporate strategy is to grow its existing brands, introduce new products, and make strategic acquisitions. These three goals are focused on the North American market. Across its brands, Smucker’s aims to be the number one product in every product line in which they compete. The company expanded beyond jams, and jellies to protect it from becoming an acquisition of a larger firm. By expanding, Smucker’s has made itself less likely to necessitate selling off the brand by
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Strayer University Finance is the study of the financial market form the credit card to the house payment. so is to say that finance is the driver of our economy .Because it does only show us how deal with interest but it also teach us what we need to refinance. The finance allows the mortgagee to see what will be the next step for his payment .so the main topic of our project will be focused on whether we should finance the loan on time or later on .so for the house in
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On Crisis and Resolution It is my belief that the 2008 financial crisis was caused by a number of issues, most prominently subprime lending and borrowing in an over zealous pursuit of profits, a lack of preventative action, deceptive investment banking, and finally an inconvenient rise in interest rates. I am also confident that the crisis could have been averted through more stringent monitoring of the asset-backed security and consumer lending markets. Furthermore, a similar crisis can be
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