If a Firm Can Earn a Return on Net Assets

question 102

True/False

If a firm can earn a return on net assets (common equity book value)that exceeds its cost of equity capital,it will generate positive abnormal earnings.

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Definitions:

Balanced Scorecard

An approach to strategic planning and management designed to ensure that an organization's activities are in harmony with its vision and strategy, to improve communication within and outside the organization, and to oversee the performance of the organization against its strategic targets.

Incentive Pay

Additional compensation awarded to employees for achieving specific targets or exceptional performance.

Performance Measures

Indicators or metrics used to evaluate the efficiency, effectiveness, and quality of an organization's operations or the productivity of its employees.

Long-Term Goals

Objectives set to be achieved over a longer period, often exceeding one year, focusing on significant future achievements.