Which company’s ROIC would you expect to go up more in times of inflation: a company with long-lived assets or one with short-lived assets, everything else being equal?
Answer to relevant QuestionsDescribe the impact of high inflation on the financial statements of a company. What unique challenges does inflation present for analysis of historical performance? In conditions of high inflation, nonmonetary assets tend to be stated on the balance sheet at values far below their replacement costs. Inventory accounting can further complicate historical analysis for companies in such an ...Define contingent net present value (NPV). Outline and explain the differences between standard and contingent NPV. Discuss the relative merits of including risk adjustments in cash flow or in discount rates—especially for high-growth companies in emerging markets—and show how both approaches can be aligned. How does the total market for a new product differ from a company’s addressable market? Which market is more relevant for forecasting a company’s revenues?
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