Also, Inditex has less operation expenses than H&M’s. All of these imply that Inditex is able to operate with high net profit margins. When the capital efficiency is considered, Inditex is less efficient in terms of capital than H&M due to some indicators. First is that working capital of H&M is higher than Inditex’s which can calculated by extracting other non-current assets from total assets and found as 2129 for H&M and 2082 for Inditex. Other indicator is ROA which can be calculated by dividing net income to total assets.
Buyer power tends to be higher if suppliers provide undifferentiated or standard products. 3. Porter's five forces model helps to determine both the nature of competition in an industry and the industry's profit potential. 4. If all of Porter's five competitive forces for an industry are weak (low), then established companies in the industry have the potential to raise prices and earn higher returns.
Let’s see some profitability ratio to have some in-depth discussion. On ROA, eBay and Amazon are 7.63% and 8.61%, separately, Amazon earned net income more effectively than eBay, from the data. On ROE, eBay is 18.69% and Amazon is 22.44%, it shows management in Amazon is more effective in
SMB denotes the risk factor associated with firm size. HML measures value risk. From observation of regression of these five funds, the small cap funds have higher coefficient of SMB, large cap funds have negative coefficient of SMB. Small cap funds are more sensitive to SMB factor. DFA small company value fund has a coefficient of 0.84 for SMB factor; on the contrary, DFA large company value fund has a negative coefficient for SMB, which is -0.079.
Precedents usually yield higher valuations than trading comps because a buyer must pay shareholders more than the current trading price to acquire a company. This is referred to as the control premium (use 20 percent as a 31 Customized for: JJ (jchen59@wisc.edu) Vault Guide to Private Equity and Hedge Fund Interviews Finance benchmark). If the buyer believes it can achieve synergies with the merger, then the buyer may pay more. This is known as the synergy premium. Between LBOs and DCFs, the DCF should have a higher value because the required IRR (cost of equity) of an LBO should be higher than
ANS: True PTS: 1 REF: 2 NAT: AACSB Analytic | AACSB Strategy 3. T F Superior performance is typically thought of in terms of one company's profitability relative to that of other companies in the same or a similar kind of business or industry. ANS: True PTS: 1 REF: 2 NAT: AACSB Analytic | AACSB Strategy 4. T F The more efficient a company is, the higher are its profitability and return on invested capital. ANS: True PTS: 1 REF: 2 NAT: AACSB Analytic | AACSB Strategy 5.
1. Describe the differences between nonprofit and for-profit hospitals. LITERATURE REVIEW Economic theory states that FP hospitals will operate more efficiently due to the profit motive while NP hospitals will have higher quality of care. Many studies have examined this theory. Some research suggests that the FP form of ownership structure achieves greater productive efficiency than the NP form.
A regressive tax in one in which the percentage decreases as the taxpayers’ income rises. Lower-income earners pay a larger percentage of their income in tax than higher income earners. Therefore such a tax places a larger burden on lower income households than it does on higher income earners. Almost every national government uses regressive taxes to raise a significant portion of its tax revenues. Indirect taxes such as VAT, GST and sales taxes are in fact regressive taxes, placing a larger burden on those whose ability to pay is lower and a smaller burden on the higher –income earners whose ability to pay is greater.
The firm has a ( of 0.75 but this project is twice as risky as the firm’s normal operations. The expected return on the market is 10% and the risk free rate is 6%. Should the firm undertake this project? The first stage of deciding whether the firm should undertake the project is to calculate the required rate of return for the project using CAPM. As the project is twice as risky as the firm’s normal operations, it beta will be equal to 2 x 0.75 = 1.5: [pic] We will now use this required rate of return to calculate the NPV of the project: [pic] As the project has a positive NPV, it should be accepted.
Some of you went into more detail here. To the extent those details overlapped with (b), I counted them as part of the (b) answer According to Exhibit 7a, Samsung’s costs per (256MBit equivalent) unit are lower by $1.39, or 24.4%, than those of its average competitor. They are lower by 10% than SMIC’s costs, which is Samsung’s lowest-cost competitor. An indirect way to tell that Samsung has a benefit advantage is by its ability to charge higher prices than its competitors. According to Exhibit 7a, Samsung’s prices per chip are on average higher by $0.72 than those of its competitors, or by 14.5%.