Vidyasagar University Journal of Commerce Vol.11‚ March 2006 EVA BASED PERFORMANCE MEASUREMENT: A CASE STUDY OF DABUR INDIA LIMITED Debdas Rakshit* ABSTRACT Traditional measures of corporate performance are many in number. Measures using common bases are Net Profit Margin‚ Operating Profit Margin‚ Return on Investment (ROI)‚ Return on Net Worth (RONW)‚ Earning Per Share (EPS) etc. Among these‚ again ROI is recognized as the most popular yardstick of overall performance. But it is often argued that
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services from Apple. This “perceived” relationship (through interactive software and hardware) is the business model Apple is using to build and retain their customer base. Weighted Average Cost of Capital (WACC) for Apple The WACC calculation is a company’s cost of capital in which each category of capital is equally weighted. A firm should use WACC as the discount rate when calculating the Net Present Value (NPV) of any typical project. All capital sources such as common stock‚ preferred stock
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FIN400 M1 – M5 Quiz M1 - Quiz 1. A firm has an ROE of 14% and a debt ratio of 40%. If the total asset turnover is 3.4‚ what is the firms profit margin? Ans – 2.47% 2. Which of the following statements is incorret? Ans – The over the counter market operates in a fixed location to conduct trades for local stocks. 3. All the following are are secondary market transactions except? Ans – GE sells $30 million of new preferred stock 4. Firm A and Firm B have the same total assets‚ ROA and profit
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Financial Decision Making Final Project Case analysis: Marriott Corporation Introduction and background The Marriott Corporation‚ an American firm‚ was founded in 1927 by J.Willard Marriot.The company began as a small beer stand and soon began to sell food and provided lodging that expanded rapidly. With the help of his wife Alice‚ the family owned business had 45 restaurants in nine states by 1940 and grew into one of the leading service companies. The Company has three major lines
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Case 1 Atlantic Corporation Maastricht University School of Business and Economics Corporate Governance and Restructuring 1. Is the acquisition of Royal’s linerboard mill and box plants a sound strategic move? Consider the short- as well as long-term outlook for linerboard prices and the profitability of the linerboard industry. Furthermore‚ what basis‚ if any‚ is there for expecting AtlanticRoyal’s combined linerboard and box mill operations to do better/worse than the industry overall?
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chlorate companies. The average unleveraged beta obtained from the two companies is 1.035 which reflects the risk of the project. Adjusting Dixon’s beta by re-levering it using its own target capital structure of 35% ends with a beta of 1.59. The beta obtained is used to derive the CAPM method‚ resulting in a 21.45% cost of equity. We assumed that the debt borrowed by Dixon has a rate of 11.25% calculating an after-tax cost of debts of 5.85%. Therefore‚ the weighted average cost of capital (WACC) for
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calculating the cost of capital? How does an increase in debt affect it? How do you identify an organization’s optimal cost of capital? a) The main elements in calculating the cost of capital is the opportunity cost of all capital invested in an enterprise. b) An increase in debt affects it because the cost of debt capital is equivalent to the actual or imputed interest rate on the company’s debt‚ adjusted for the tax- deductibility of interest expenses. c) An organization’s optimal cost of capital
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......................................................................................... 2 Enterprise Valuation ....................................................................................................................... 2 The Weighted Average Cost of Capital Approach ......................................................................... 2 The Adjusted Present Value Approach........................................................................................... 4 The Capital Cash
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rated for low‚ average‚ and high risk projects. This paper critically reviews the different suggested measures and finally proposes measures that should be taken to improve the performance of the Randolph Corporation. Divisional Hurdle Rates To estimate the hurdle rates for every division of the Randolph Corporation that weighted average cost of capital (WACC) have to be calculated for every division. To apply the formula of the WACC the costs of equity have to be known. The cost of equity can
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Therefore‚ the market value of Beta Corporation’s equity (S) is $75‚000. d. Since the market value of Alpha Corporation’s equity is $100‚000‚ it will cost $20‚000 (= 0.20 * $100‚000) to purchase 20% of the firm’s equity. Since the market value of Beta Corporation’s equity is $75‚000‚ it will cost $15‚000 (= 0.20 * $75‚000) to purchase 20% of the firm’s equity. e. Since Alpha Corporation expects to earn $350‚000 this year and owes no interest payments‚
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