ERASMUS UNIVERSITY ROTTERDAM - ESE Bachelor Thesis: Economic Value Added and its Effect on Managerial Behaviour An Investigation into the Effectiveness of an Economic Value Added Compensation System ARUN PARAGH 11/7/2012 Student: Student ID: Supervisor: Department: July 2012 Arun Paragh 321388 Bart Snel Accounting‚ Auditing & Control Abstract As the financial statements of companies grow in importance‚ its users are increasingly demanding more adequate measures of performance and
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most of their retained earnings profitably‚ then they may do so. However‚ sometimes companies may find that some or all of their retained earnings cannot be reinvested to produce acceptable returns. Share repurchases are one possible use of leftover retained profits. When a company repurchases its own shares‚ it reduces the number of shares held by the public. The reduction of the float‚ or publicly traded shares‚ means that even if profits remain the same‚ the earnings per share increase. So‚ repurchasing
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CHAPTER 3 ANALYSIS OF FINANCIAL STATEMENTS Please see the preface for information on the AACSB letter indicators (F‚ M‚ etc.) on the subject lines. True/False Easy: We tell our students (1) that to answer some of these questions it is useful to write out the relevant ratio or ratios‚ then think about how the ratios would change if the accounting data changed‚ and (2) that sometimes it is useful to make up illustrative data to help see what would happen. (3.1) Answe Ratio r: a analy sis EASY
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| $58.75-67.00 | Market Capitalization | $105.68 | Shares Outstanding | 1.58 | Institutional Ownership | 67.60% | Dividend Yield | 2.9% | Price/Earnings (ttm) | 16.81 | Price/Book | 5.26 | Price/Sales | 1.85 | ROA (ttm) | 10.70% | ROE (ttm) | 36.27% | Projected 5-Year Growth | 10.25% | EPS ($) Year | 2007 | 2008 | 2009 | 2010 | EPS | 3.48 | 3.26 | 3.80 | 4.61 | All earnings represent earnings from operations and have been filtered from net nonrecurring gains. Catalogue
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the optimal level due to strong signals the hedge fund is trying to pursue. Effect of recapitalization on WACC The current WACC of Wrigley is 10.9%. Since it is all equity firm the WACC is same as cost of equity. Raising $3billion debt for repurchase of stock or dividend would change the capital structure of the firm. The raised debt‚ because of the debt tax shield under good credit ratings‚ would reduce WACC and hence increase value of the firm. But in our case‚ the WACC after including the
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750 000 Total liabilities in 1997: Profit Margin + % Sales of Liabilities + Short Term Investment = 408 003 840 + 58 750 000 + 591 000 000 3) The third liability assumption is the repayment of debt and the repurchase of $500 million of equity. The other liabilities are assumed to remain at 1996 sales ratios. As a result of reducing debt and equity capital‚ Dell would create a substantial cash shortfall of almost $1 billion. 500 million +113 million + 779 million
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AutoZone’s stock price has increased dramatically. On February 1. 2012 the stock price was $348 compared to the $125 on February 1. 2007. The strong price appreciation resulted from several occurrences; some of them are U.S. economy recession and share repurchase program. Auto-part business was somewhat counter-cyclical. Company’s growth and stock price were directly related to the economy and number of miles a vehicle had been driven. As the age of car increased‚ more repairs were required. Because of these
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company possesses. They are potentially investigating‚ if it is good to recapitalize is it right to repurchase the shares with the debt or to pay dividends with the entire debt. There are major changes that take place in the following list of questions given to us and the following answers are answered according to the questions order. The answers are tabulated below. | Dividends | Repurchase of stock | Outstanding shares | 232‚440‚000 | 183‚686‚000 | Book value of equity | $(1724) | $(1724)
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core business at the reasonable price. As of March 31‚ 1998‚ Torstar share structure included 5 million Class A voting shares and 34 million Class B non-voting shares. Since they believed prevailing Class B stocks were undervalued‚ they began to repurchase it back from December 17‚ 1997. In 1997 the debt-to-total-asset ratio was 18%‚ and management believed that 30% was more appropriate. Actually they also suppose that they could carry a 50% debt-to-total-asset ratio if they had a suitable strategic
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May 3‚ 2011 May 3‚ 2011 Western Union in 2008: Send Me The Money! Western Union in 2008: Send Me The Money! Current Situation Summary Western Union was founded in 1851 and started its history as a telegraph and wire services company. In 2006‚ Western Union discontinued its telegraph service and focused exclusively on money transfers (Pearce & Robinson‚ 2011). Jorge Ochoa‚ Vice President of Finance and Raul Duany‚ Director of Corporate Communication joined The Western Union Company
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