Question

As investor, give recommendation how to examine the value and performance implications of the growing trend of non-technology companies adopting digital technologies

i) valuation

ii) return expected

iiii)fundamental performance

iv) others factors

Answer 1

A) valuation- valuation of non technology companies which are adopting technologies will be going to go up because their businesses are increasing and they are also adding digitalization in their overall business prospects so there would be a higher multiple awarded to them because of growth perspective in future.

B)return expected will also be higher from such companies because of higher valuations arising out of of adoption of technological features by these non technology companies and it would mean that it would lead to a expected rate of return as the growth rate would be higher and there would be a higher market returns.

C) fundamental performance of the company is also going to increase because it would mean that when the non technology company is adopting with the technological feature, it will provide with an additional competitive edge to the company and it will also help them to carry their businesses in a digitalised way and it will also help in growing the potential customers and it will fundamentally help the company in the long run in achieving a sustainable development.

D) other factors like retention of customers, increase of new investors, and merger and acquisition capabilities and diversification of activities will be higher because these companies will be e having a better growth prospects in the future and they will be better placed to gain an advantage from the futuristic development.