What are the potential reasons why TRS over short periods of time may not reflect the actual performance of a company and its management?
Answer to relevant QuestionsWhat actions (good and bad) might managers take when investors have already-high expectations and managers desire to outperform peers on TRS? Why do companies operating within the pharmaceutical and biotechnology industries typically sustain higher ROICs than firms in the technology, hardware, and equipment industries? Identify and discuss an example where growth in market share through a price war created long-term value for a company. What are the three components required to calculate economic profit? Determine BrandCo’s economic profit in year 1. Many companies hold significant amounts of excess cash, that is, cash above the amount required for day-to-day operations. Does including excess cash as part of invested capital distort the ROIC upward or downward? Why?
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