Explain the three shareholder metrics used in market-based management
What will be an ideal response?
Shareholder value metrics are especially important because they measure earnings per share, economic profit, and the price-earnings ratio. All of these metrics start with market demand and the efficiency of a business's effort to capture market share.
(1 ) Earnings per Share - Net profit divided by the number of shares equals earnings per share.
(2 ) Economic Profit - Economic Profit tells us the amount that is left over after the cost of capital is taken into account. This dollar metric is equal to net profit minus invested capital times the cost of capital.
(3 ) Price-Earnings (PE) Ratio: A company's PE ratio is the ratio of the company's stock price to its earnings per share. The higher the PE ratio, the greater the risk to investment.
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Royer Corporation engaged in this transaction: Purchased 60-day commercial paper. Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash flows
a. Does not represent a cash flow b. Operating activities section c. Financing activities section d. Investing activities section
Which one of the following actions should a company take IMMEDIATELY when it finds that its product is defective?
A. inform buyers about it B. take corrective action in a timely manner C. stop producing the product D. lower the price
Explain the accounting for the issuance of securities with warrants attached or that have conversion privileges
Investment banks form a temporary alliance, called a , to underwrite a bond issue
a. selling group b. syndicate c. coalition d. pricing association