21 Questions
What is the main difference between EVA and RONA?
EVA is a monetary return, while RONA is a percentage return
What is the relationship between EVA and WACC?
EVA is the difference between RONA and WACC
Why is EVA a better measure of performance than RONA?
Because EVA takes into account the cost of capital
What is the inventory turnover ratio for Siemens in 2022?
4.74
What is the formula for calculating EVA?
EVA = (RONA - WACC) · invested capital
What is the purpose of using EVA as a performance measure?
To measure the value created by a company
What is the total asset turnover ratio for Siemens in 2022?
0.49
What is the debt to equity ratio for Siemens in 2022?
1.04
What is the operating margin for Siemens in 2022?
0.0613
Why is it important to consider the benchmarks when performing ratio analysis?
To compare the performance of the firm with the industry average
What is the limitation of ratio analysis when firms have different accounting methods?
Ratios are not comparable between firms
What is the primary goal of Value-Based Management?
Increase Shareholder Value
What is the formula to calculate EVA?
NOPAT - Capital Charges
What is the Working Capital Requirement (WCR) representative of?
The company's net investment in the operating cycle
What is the purpose of the EVA balance sheet?
To distinguish net assets from invested capital
What is the risk of using RONA as a performance measure?
Motivating managers to undertake value-destroying projects
What is the Operating Cycle composed of?
Inventory period and receivables period
What is the purpose of calculating EVA?
To measure the company's economic profit
What is the result of a company's EVA being higher than its WACC?
Value creation
What is the relationship between EVA and Shareholder Value?
EVA increases as Shareholder Value increases
What is the primary goal of calculating Working Capital Requirement?
To optimize Operating Cycle
Test your knowledge on Value-Based Management with this quiz. Learn about measuring value creation, discounted cash flow, and value-based performance measures. Evaluate your understanding of EVA improvement and invested capital.
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