Do companies with the next monetary outcomes have beneath regular, regular, or above regular financial efficiency? If ROA > WACC: * Firm creates worth for shareholders * Firm generates a constructive NPV (Web Current Worth) * Firm generates a constructive EVA (Financial Worth Added) (a) ROA = 14. three%, WACC = 12. eight% Above regular financial efficiency (b) ROA = four. three%, WACC = 6. 7% Under regular financial efficiency (c) ROA = 6. 5%, WACC = 9. 2% Under regular financial efficiency (d) ROA = eight. three%, WACC = eight. three% Regular financial efficiency . Is it attainable for a agency to concurrently earn above regular financial returns and beneath common accounting returns? How about beneath regular financial returns and above common accounting returns? Why or why not? If this may happen, which measure of efficiency is extra dependable; financial efficiency or accounting efficiency? Why? The correlation between financial returns and accounting returns is one-to-one.
Meaning an organization that performs properly utilizing one in all these measures often perfrm properly utilizing the opposite.
Nonetheless, it’s attainable for an organization to have above regular financial returns and beneath common accounting returns.
This might occur when a agency has a really low price of capital and is incomes at a fee in extra of this price, however nonetheless beneath the business common. Can also be attainable for an organization to have beneath regular financial returns and above common accounting returns. This might occur when a agency isn’t incomes its price of capital however has above business common accounting efficiency. 1,three,5 chapter 2 1, 2
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