The Only Measure of Firm Performance That Accounts for Cost

question 71

Multiple Choice

The only measure of firm performance that accounts for cost of capital is:

• A) ROC.
• B) ROA.
• C) ROE.
• D)EVA.

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Definitions:

Net Realizable Value

The estimated selling price of goods or inventory in the ordinary course of business minus any costs of completion, transportation, and selling.

Discounted Present Value

The calculation of the present value of an expected future cash flow, discounted at an appropriate rate.

GAAP Balance Sheet

A financial statement that presents the financial position of a company according to Generally Accepted Accounting Principles, listing assets, liabilities, and equity.

Corporate Valuation

The process of determining the overall value of a business entity considering its assets, earnings, market position, and potential for future earnings.