Why is the old way of decomposing TRS (into changes in earnings, changes in P/E, and dividend yield) not the best way to understand a company’s performance?
Answer to relevant QuestionsFrom a value-creation perspective, is it more important for a company to know where to compete or how to compete? That is, is it more important to play in the right markets or to be the best player in your current markets? Discuss why, within the broader health care sector, ROIC can be declining for health-care facility companies but increasing for health-care equipment companies. If growth fromgaining market share through product promotion and pricing rarely creates much value, why do most consumer goods companies put so much effort into it? 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 ...DefenseCo announces a purchase of Gulf Aviation for $1.1 billion in cash. Consequently, Gulf Aviation’s invested capital with goodwill and acquired intangibles rises from $600 million to $1.1 billion. The following year, ...
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