Explain the conservation of value principle. What decisions might it affect?
Answer to relevant QuestionsHow does return on invested capital (ROIC) affect a company’s cash flow? Explain the relationship between ROIC, growth, and cash flow. What is the conservation of value principle? Provide some examples of where it might apply. What actions (good and bad) might managers take when investors have already-high expectations and managers desire to outperform peers on TRS? Discuss why, within the broader health care sector, ROIC can be declining for health-care facility companies but increasing for health-care equipment companies. BrandCo currently has 50 million shares outstanding. If BrandCo’s shares are trading at $19.16 per share, what is the company’s market capitalization (value of equity)? Assuming the market value of debt equals today’s ...
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