Reading 50: Security Analysis Using Value-Based Metrics -

答案和详解如下：

6.Which of the following statements about the EVA calculated in the previous question is least accurate?

A)   Even though the EVA figure is positive this does not necessarily mean that management has added value during the last year.

B)   A firm will generate a positive EVA if its operating revenues exceed its operating expenses and capital costs.

C)   Economic measures of profitability such as EVA are more appropriate for the analyst to use in assessing the firm’s profitability than accounting measures like ROE.

D)   Firms that invest in negative NPV projects destroy value and generate negative EVA.

The correct answer was A)

A positive EVA does mean the firm was successful at creating economic profits and did add value by investing in positive NPV projects thereby developing a sustainable competitive advantage.

7.The key difference between economic profit and accounting profit is that:

A)   the costs used in computing economic profit include the cost of capital.

B)   economic profit is computed using expected costs while accounting profit is calculated using historical costs.

C)   accounting profit is sensitive to the firm's cost of capital while economic profit is not.

D)   economic profit is computed over multiple periods while accounting profit is a single-period measure.

The correct answer was A)

Economic profit during a given period is equal to revenues minus all costs, including the cost of invested capital.

8.All of the following statements highlight the differences between accounting profit and economic profit EXCEPT:

A)   the costs used in computing economic profit include the cost of capital.

B)   economic profit is expressed as a return while accounting profit is expressed in dollars.

C)   economic profits are cash-based whereas accounting profits are based on accrual accounting methods.

D)   economic profits are less susceptible to management manipulation than accounting profits.

The correct answer was B)

Accounting profit can be expessed in dollar or percent terms but EVA profit is always expressed in dollars.

9.The Economic Value Added (EVA^®) in a given period is calculated by:

A)   deducting interest, dividends and other financing charges from NOPAT.

B)   deducting $WACC from NOPAT.

C)   discounting the NOPAT adjusted for capital costs by the WACC.

D)   discounting the net after-tax cash flow by the WACC.

The correct answer was B)

The economic value added is given by: EVA = NOPAT – $WACC.

10.Which of the following statements regarding economic profits is TRUE? Economic profits:

A)   include the cost of capital.

B)   are cash based.

C)   All are correct statements.

D)   should not be subject to management manipulation.

The correct answer was C)    

The key difference between economic profit and accounting profit is that economic profit includes the cost of capital, whereas accounting profit does not consider the cost of capital. Another difference between accounting profit and economic profit is that economic profit is cash based, whereas accounting profit is based on accrual accounting. Lastly, economic profits should not be subject to management manipulation.