Technische Universitt Mnchen
Value-Based Management
Handout Problem Set 2
Relative Performance Measures and EVA calculation
Lehrstuhl fr BWL Controlling
Prof. Dr. Gunther Friedl
Email for questions and comments: iris.pfeiffer@tum.de
Technische Universitt
VALUE-BASED MANAGEMENT - SS 2014
Prof. Dr. Gunther Friedl
The concept of goal congruence
A managerial performance measure is goal congruent if it gives the manager the incentives to
make present value maximizing decisions.
A managerial performance measure
VALUE-BASED MANAGEMENT - SS 2014
Prof. Dr. Gunther Friedl
Solution to 11.2 (11.1. is equal to question 3 in problem set 2)
R&D adjustments
2009
R&D expense
Depreciation of
R&D expense 2009
2010
2011
2012
2013
80,000
84,000
92,000
100,000
106,000
20,000
1
Technische Universitt Mnchen
Value-Based Management
Handout Problem Set 6
Goal Congruence
Lehrstuhl fr BWL Controlling
Prof. Dr. Gunther Friedl
Email for questions and comments: iris.pfeiffer@tum.de
Technische Universitt Mnchen
Goal Congruence: different
Technische Universitt Mnchen
Value-Based Management
Handout Problem Set 4
Calculating the Cost of Capital
Lehrstuhl fr BWL Controlling
Prof. Dr. Gunther Friedl
Email for questions and comments: iris.pfeiffer@tum.de
Technische Universitt Mnchen
Handout Pro
VALUE-BASED MANAGEMENT - SS 2014
Prof. Dr. Gunther Friedl
Solution to Question 9
Results of 9.1 and 9.2:
A 1.1386
E RM 9.8%
9.3 Cost of equity (using the CAPM):
ER A R f A ER M R f 0.03 1.1386 0.098 0.03 10.74%
9.4 WACC:
250
50
0.1074
0.06 1 0.35 9.6%
Technische Universitt Mnchen
Value-Based Management
Handout Problem Set 7
Valuing and Managing Real Options
Lehrstuhl fr BWL Controlling
Prof. Dr. Gunther Friedl
Email for questions and comments: iris.pfeiffer@tum.de
Technische Universitt Mnchen
Question
Technische Universitt Mnchen
Value-Based Management
Handout Problem Set 1
Financial Statements and Financial Ratio Analysis
Lehrstuhl fr BWL Controlling
Prof. Dr. Gunther Friedl
Email for questions and comments: iris.pfeiffer@tum.de
Technische Universitt
VALUE-BASED MANAGEMENT - SS 2014
Prof. Dr. Gunther Friedl
Question 2: Relative Performance Measures
ROA is a relative performance measure calculated similar to ROI. In the following
reasoning you can substitute ROI for ROA or any other return on investmen
Technische Universitt Mnchen
Value-Based Management
Handout Problem Set 5
Accounting Adjustments for Calculating EVA
Lehrstuhl fr Controlling
Prof. Dr. Gunther Friedl
Email for questions and comments: iris.pfeiffer@tum.de
Technische Universitt Mnchen
Ques
Technische Universitt Mnchen
Value-Based Management
Handout Problem Set 3
Management Compensation - Bonus Banks
Lehrstuhl fr BWL Controlling
Prof. Dr. Gunther Friedl
Email for questions and comments: iris.pfeiffer@tum.de
Technische Universitt Mnchen
Value
VALUE-BASED MANAGEMENT - SS 2014
Prof. Dr. Gunther Friedl
Activity Ratios Pfizer
2013
Inv. Turnover
CoGS
Av. Inventory
9,586
1
6,166 6,076
2
1.57
365
232
1.57
Average no. of days inventory in
stock
Receiv. Turnover
Sales
Av. Trade Receiv.
51,584
1
9,
Value-Based Management - SS 2014
Prof. Dr. Gunther Friedl
Solution to Problem Set 3
Question 6:
Management compensation and bonus banks
6.1: Calculation of bonus payments
Year
2010
2011
2012
2013
-90.000
112.500
-45.000
90.000
22.500
22.500
4.500
=45.0000
VALUE-BASED MANAGEMENT - SS 2014
Question 13:
Prof. Dr. Gunther Friedl
Residual income and the option to wait
The decision tree of the manager in this problem is as follows:
t=0
t=1
invest b
in P1
t=2
cash flow c1
invest b
in P2
cash flow
c2 (c2H, c2L)
no