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ELEN [110]
2 years ago
14

K. Johnson, Inc.'s managers want to evaluate the firm's prior-year performance in terms of its contribution to shareholder value

. This past year, the firm earned an operating income return on investment of 12 percent, compared to an industry norm of 11 percent. It has been estimated that the firm's investors have an opportunity cost on their funds of 15 percent, which is the same as the firm's overall cost of capital. The firm's total assets for the year were exist100 million.
Required:
a. Compute the amount of economic value created or destroyed by the firm.
b. How does your finding support or fail to support what you would conclude using ratio analysis to evaluate the firm's performance?
Business
1 answer:
jolli1 [7]2 years ago
3 0

Answer:

-3 million dollars

Explanation:

we have EVA = economic value added

to ge the EVA, we use this formula :

(operating return on the assets - cost of the total capital) multiplied by the total assets

total assets = 100 million

operating return = 12 percent

cost of capital = 15 percent

the EVA = 12% - 15% * 100000000

= -0.03 * 100000000

= -3,000,000 dollars

b. The loss of the value of the shareholder is happening even though the firm is earning ROI that is more than the average firm in the industry.

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The correct answer is the option: True.

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Laura is a gourmet chef who runs a small catering business in a competitive industry. Laura specializes in making wedding cakes.
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Answer:

The correct answer is the letter a. "Make more than 20 wedding cakes a month."

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krok68 [10]

Answer:

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During a pandemic, goods and services may become scarce as a result of: A. Unwillingness to purchase goods and services due to f
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Explanation:

Restrictions on travel in and out of affected areas can lead to Scarcity in a Pandemic because there is no free movement of labour and capital.

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Question 4 of 10
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I think the answer is either a or c
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