|
LOS a, (Part 2): Calculate and interpret related measures of residual income (e.g., economic value added and market value added). ffice ffice" />
Q1. A common adjustment in calculating economic value added (EVA?) is to:
A) add back deferred taxes.
B) capitalize and amortize research and development expenses.
C) treat capital leases as operating leases.
Correct answer is B)
It is common to capitalize and amortize research and development (R&D) expenses and add R&D expenses back to earnings. Deferred taxes are eliminated to pick up only cash taxes. Operating leases are treated as capital leases.
Q2. Market value added is calculated as:
A) net operating profit after taxes minus a charge for total capital.
B) market value of the company minus total capital.
C) market value of the company minus a charge for equity capital.
Correct answer is B)
Market value added is the market value of the company minus total capital. It is used to measure the effect on value of management’s decisions since the firm’s inception.
Q3. Economic value added (EVA?) is calculated as net operating profit after taxes minus:
A) a charge for total capital.
B) a charge for equity capital.
C) capital expenditures.
Correct answer is A)
EVA = NOPAT – (C% × TC), where NOPAT is a firm’s net operating profit after taxes, C% is the cost of capital, and TC is total capital.
| 
发表于 2009-3-9 17:50
| 
