residual earnings (RE) may or may not be the same as net income. Group of answer choices

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Question:

residual earnings (RE) may or may not be the same as net income.
Group of answer choices

True

False

Flag question: Question 28
Question 281 pts
Residual earnings (RE) = Earnings minus (Beginning of the period book value of equity * Ke)
Group of answer choices

True

False

Flag question: Question 29
Question 291 pts
Residual earnings (RE) = Earnings minus (Beginning of the period book value of equity * WACC)
Group of answer choices

True

False

Flag question: Question 30
Question 301 pts
Residual earnings (RE) = NOPAT minus (Beginning-of-the-period NOA * WACC)
Group of answer choices

True

False

Flag question: Question 31
Question 311 pts
Residual operating income (ROPI) = NOPAT minus (Beginning-of-the-period NOA * WACC)
Group of answer choices

True

False

Flag question: Question 32
Question 321 pts
Residual operating income (ROPI) is the net operating profit a firm earns over and above the return that the operating assets are expected to earn given the firm's cost of equity (Ke).
Group of answer choices

True

False

Flag question: Question 33
Question 331 pts
The ROPI model and the DCF models yield identical per share estimates so long as the firm is in a steady-state, that is, when both NOPAT and NOA are growing at the same rate such that RNOA is the same each year.
Group of answer choices

True

False

Flag question: Question 34
Question 341 pts
The ROPI model and the DCF models will always yield identical per share estimates of stock value.
Group of answer choices

True

False

Flag question: Question 35
Question 351 pts
The ROPI model and the DCF models will never yield identical per share estimates of firm value.
Group of answer choices

True

False

Flag question: Question 36
Question 361 pts
Residual operating income (ReOI) or ROPI = NOPAT – (WACC * NOABeg), where WACC is the weighted average cost of capital.
Group of answer choices

True

False

Flag question: Question 37
Question 371 pts
ReOI is the excess of reported NOPAT over what we expected NOPAT to be, given the level of NOA and the firm’s WACC.
Group of answer choices

True

False

Flag question: Question 38
Question 381 pts
Disaggregating ROA into its component parts highlights that the value of a firm depends critically on both turnover (ATO) and equity multiplier (EM).
Group of answer choices

True

False

Flag question: Question 39
Question 391 pts
Disaggregating ROE into its component parts highlights that the value of a firm depends critically on both turnover (ATO) and profit margin on sales (PM).
Group of answer choices

True

False

Flag question: Question 40
Question 401 pts
Abnormal earnings growth (AEG) is calculated as cum-dividend earnings plus normal earnings.
Group of answer choices

True

False