Asset allocation systems (Ch 7) ROI, EVA Preview

Asset allocation systems (Ch 7) ROI, EVA Preview -...

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Objectives To provide information that is useful in making sound decisions about assets employed Motivate managers to make decisions in the best interest of the company To measure the performance of the business unit as an economic entity Topics Types of Assets employed in an investment centre Evaluating Return on Assets Return on Investment (ROI) Economic Value Added (EVA) & Residual Income Measuring and Controlling Assets Employed (Ch 7) Investment Centres
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Measuring Assets Employed Efficient use of assets Evaluation of how to acquire the proper amount and type of new assets What practices best measures the performance of a business unit?
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Return on Investment (ROI) Return on Investment = Includes all the major ingredients of profitability (revenues, costs, and investment) Income Investment Return on Investment = Revenues Investment x Income Revenues Profitability Turnover Can break out the basic formula as follows (sometimes called the DuPont formula) to measure investment turnover and profitability
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This note was uploaded on 03/24/2012 for the course ACCOUNTING IAF taught by Professor Ganesh during the Spring '12 term at Seneca.

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Asset allocation systems (Ch 7) ROI, EVA Preview -...

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