What is the conservation of value principle? Provide some examples of where it might apply.
Answer to relevant QuestionsWhat is financial engineering? When does it create value? What are the potential reasons why TRS over short periods of time may not reflect the actual performance of a company and its management? Why are competitive advantages based on brands, as in the consumer goods industry, often more important for long-term value creation than advantages based on product quality or innovation? Discuss why the ranking of industries by growth varies more over time than their ranking by ROIC. Exhibit 7.15 presents the income statement and balance sheet for Companies A, B, and C. Compute each company’s return on assets, return on equity, and return on invested capital. Based on the three ratios, which company ...
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