Exam 2: Goals, Values and Performance

Ford, Microsoft and Sony are illustrations of:

Value added can be defined as:

Proper interpretation of accounting ratios requires:

The value added created by a firm is:

To what extent is a firm's value approach helpful in assessing performance from an external point of view?

The concept of consumer surplus is defined as:

How best to express the fundamental objectives of the firm in terms of multiple stakeholders' interests is:

The text focuses on enterprise value rather than shareholder value primarily because:

Estimating a firm's future free cash flows is an easy task

A balanced scorecard is used for:

Strategic appraisal essentially involves:

In practice, valuing firms by discounting economic profits leads to the same result as by discounting the firm's net cash flows

For working out EVA, the cost of capital is calculated as:

Many of the most successful firms were founded on and are driven by core motives other than pure profit

To understand poor financial performance, one can identify the "drivers of performance". These drivers are:

The notion that a firm is merely the private property of the shareholders is questioned as outdated by leading contemporary management theorists.

What is economic profit?

The maximization of profit in the long-term equates to the maximization of the firm's value, where this value is equal to the Net Present Value of the firm's projected future cash flows

The assumption that the maximization of shareholder value equates to long-term maximization of profit, is justified partly by "simplicity" which means that:

The Discounted Cash Flow method is in general used for: