Question

In: Operations Management

The text states that ROW, ROE and EPS are not reliable indicators of a corporations's economic...

The text states that ROW, ROE and EPS are not reliable indicators of a corporations's economic value. Comment on what are other measures of corporate performance and strategic managment effectiveness.

Solutions

Expert Solution

The corporation can use economic value added (EVA) as the indicator to identify the economic value. EVA measures the actual wealth being created for the shareholders that is over and above the cost of capital. Cost of the capital is the required return that can be earned elsewhere by shareholders. True wealth is only created when the corporation earns above the cost of capital. It is measured by EVA and corporations can rely on it. The second indicator that can be used by the corporation is performance as per the balanced scorecard. That not only measures the financial performance, but also the different dimensions of the efficiency at work. It tells about the learning curve of the employees, risk management framework, customer satisfaction and financial soundness of the corporation. Hence, different dimensions of the value added to the corporation can be measured by the Balance scorecard. Balance score card also explains the success of strategic implementation and realization of vision w.r.t. the corporation. The third indicator is the relative market share & growth of the corporation. It indicates the overall performance of the corporation in the business environment with reference to the other peers & competitors. Hence, it is a measure of strategic success.


Related Solutions

The United States uses a set of three “key economic indicators” to measure the health of...
The United States uses a set of three “key economic indicators” to measure the health of the U.S. economy. What are these three key economic indicators, and what does each indicator tell us about the health of our economy? What are the advantages or disadvantages of looking at just one of these indicators without considering the others? There is a variety of strategies that a business can use in order to reach global markets. For each of the following businesses,...
Is the current United States economy trending up or down? Use three economic indicators in response....
Is the current United States economy trending up or down? Use three economic indicators in response. How would you describe the US’s economic system and why? How would describe China’s economic system and why?
NO PLAGARISM Introduction: Describe economic indicators and briefly describe the United States economy. (can talk about...
NO PLAGARISM Introduction: Describe economic indicators and briefly describe the United States economy. (can talk about covid-19 and at least one paragraph) Conclusion: Summarize the overall state of the United States economy. (can talk about covid-19 and at least one paragraph)
Assume the United States has a potential GDP of approximately $18 trillion. Use economic indicators from...
Assume the United States has a potential GDP of approximately $18 trillion. Use economic indicators from the last eight quarters (two years) to make a determination about the state of the economy, whether the U.S is in a recession, expansion or macroeconomic equilibrium. You must explain and support your answer with information you have researched and learned during the semester. Any research that is used must be cited in the paper. This information should include the following: Real GDP
 Unemployment...
Introduction: Describe economic indicators and briefly describe the United States economy(can talk about covid-19 and at...
Introduction: Describe economic indicators and briefly describe the United States economy(can talk about covid-19 and at least one paragraph) Conclusion: Summarize the overall state of the United States economy. (can talk about covid-19 and at least one paragraph)
1.state of the United States economy based on your observation of six important economic indicators 2.Define...
1.state of the United States economy based on your observation of six important economic indicators 2.Define the six economic indicators you have chosen and discuss how this data is obtained and calculated
4. The blue company has ROE = 25%; growth in EPS = 4.5%; payout ratio of...
4. The blue company has ROE = 25%; growth in EPS = 4.5%; payout ratio of 35% and investors required return of 12.5%. Calculate the price to book value ratio. If P/BV = 2.5 you will buy_________ you will sell__________                 5.a) If the payout ratio is 35% and net profit margin is 4.5% with a growth rate of 5%, calculate price to sales ratio if you require a 11% return on investment. b) If sales rise by $1.25 per...
Why is the index of leading economic indicators useful for forecasting GDP? Which indicators can be...
Why is the index of leading economic indicators useful for forecasting GDP? Which indicators can be used as leading economic indicators and why?
Tables or Graphs Using the Internet, the text, or another reliable source such as a newspaper...
Tables or Graphs Using the Internet, the text, or another reliable source such as a newspaper or periodical site, (not a scholastic or school site like Khan Academy and not Wikipedia), research some important data that has been presented in graph or table format. Make sure to cut and paste the chart or table; if that is not possible, paste a link to the webpage. (Check it to be sure it links correctly.) Present your graph and fully explain the...
Unemployment declines dramatically. This is a ________. a) not useful as economic indicators b) leading economic...
Unemployment declines dramatically. This is a ________. a) not useful as economic indicators b) leading economic indicators c) lagging economic indicators d) coincidental economic indicators
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT