16 Questions
What are the three major things that value creation boils down to?
Spread, growth, sustainability
What is the key value driver related to spread?
Positive spread between ROIC and cost of capital
What does the text say about growth as a value driver?
Growth does not create value
What is the significance of having a positive spread for value creation?
Value creation requires a positive spread
What is the key driver that influences Return on Invested Capital (ROIC) according to the text?
Profitability and productivity
What is the financial cycle time a measure of?
Efficiency in making profit
What is the annualized profit number called?
ROIC
What represents how much a company spends to make a sale or how often a company sells its product?
Productivity or efficiency
What is the third driver that impacts a company's value according to the text?
Risk or cost of capital
What is the key driver that investors focus on according to the text?
Growth/spread combination and growth/return combination
What does ROIC stand for?
Return on Invested Capital
What represents how much a company makes when it sells a product?
Profit margin
What is the measure of how long a company can maintain its return and spread according to the text?
Sustainability of advantage
What is the function of ROIC according to the text?
Proxy for how much cash a company will generate on an annualized basis
What represents the levers that can be pulled to drive value for a company according to the text?
Key value drivers
What is the measure of how much a company makes and how often according to the text?
ROIC
Test your understanding of key value drivers and their impact on value creation with this quiz. Explore the concepts of spread, growth, and sustainability to gain insights into the math behind value creation.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
