How is can CAPM, Sharpe ratio, Treynor measures and Jensen’s Alpha be used to maintain positive return on assets?

Q: How do you calculate Fixed Asset Turnover? What is the Free Cash Flow Ratio? What is the difference…

A: The answers for the questions on accounting ratios are discussed hereunder : Fixed Assets turn over…

Q: Explain how the cost of capital serves as a screening tool when using (a) the net present value…

A: Cost of capital:   Cost of capital is the required return necessary to make a capital budgeting…

Q: Which is the accounting rate of return using the average investment?

A: Summary of the relevant information as provided in the question : cost of investment =    £…

Q: Does the accounting (book) rate of return (ARR) method provide a valid (or, meaningful) measureof…

A:

Q: Apply the procedure to find the true IRR, or return on invested capital, of the mixed investment?

A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…

Q: Why do most assets of the same type show positive covariances of returns with each other?

A: Covariance is a way of measuring the directional relationship between the returns on two assets and…

Q: Explain rate of return on total assets.

A: Accounting Ratio:   It refers to a number expressed in terms of another to establish relationship…

Q: Explain how the cost of capital serves as a screening tool when using the net present value method.

A: Definition: Net present value method: The net present value method is the method that is used to…

Q: How to calculate profitability analysis?

A: Sales revenue: It is the revenue earned by a business on selling the goods or providing services to…

Q: Explain what Return on Assets (ROA) measures? Will two firms with the same EBIT have the same ROA?

A: Return on assets is a measure used by companies to analyse how effectively assets of the business…

Q: Which of the following is the correct definition for present value (PV)?

A: Present value is an important concept in finance which is based on the concept of time value of…

Q: Which of the following terms accurately describe what a resource is worth in its next- best use. a.…

A: In this question the factor which describes the best worth of resources is asked. We will analyse…

Q: Which of the following should not be included as an application of the rate of return concept? rate…

A: As per the guidelines, only one question is allowed to be answered so, I am answering question no.…

Q: Which items comprise operating current assets? Why is itreasonable to assume that they grow…

A: Operating current assets are the short-term assets utilized to promote a business's processes

Q: In the case of the net present value technique, explain how the cost of capital is used as a…

A: The question tells about the net present value technique and  how the cost of capital is used as a…

Q: What have been the possible reasons for the changes in ROEs ? •Decompose the (Return on Equity) ROE…

A: Return on equity depicts the efficiency of the company in using its shareholder's capital in the…

Q: Discuss how the Accounting Rate of Return as an investment appraisal method is better than the Net…

A: Accounting ROR or ARR and Net Present Value(NPV) are tools that are used to make selection among…

Q: What is the main drawback of using income from operations to measure the effectiveness of investment…

A: Introduction: Investment centers are firms that invest in other businesses to increase their…

Q: What is more important for asset valuation? Cash flow or accounting profit? Please fully explain the…

A: Introduction:- Any resource that a business or economic organisation owns or controls is referred to…

Q: How do economies of scale and lumpy assets affect financialforecasting?

A: Economies of scale are cost advantages reaped by companies when production becomes efficient.…

Q: What is the significance of the FCF (Free Cash Flow) in the area of valuation?

A: Cash flows refer to the cash expenditure and cash receipt of the business over a specific time…

Q: Which of the following scenarios can increase the return on assets? Other thing equal, decrease the…

A: Return on assets = Total ReturnAverage Total Assetsx100

Q: Why is the operating return on assets ratio also referred to as the operating returnon investment?

A: Introduction: Operating asset return is nothing but a profitability measure and it is a difference…

Q: Explain an example how to calculate rate of return on total assets.

A:

Q: How can the Calculation of capital-recovery cost (with return)be done?

A: Capital Recovery Cost: When a company purchases or invest in some assets for the business…

Q: What is the return on invested capital (RIC)?

A: Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in…

Q: “Explain the reasons why the net present value (NPV) method of investment appraisal is likely to be…

A: The Net Present Value (NPV) is a company's financial tool used to estimate the viability of…

Q: How can we invest in two assets with similar return characteristics?

A: An asset is something that provides benefits in the future to its owner. There are two types of…

Q: asset turnover ratio?

A: Asset turnover ratio = Sales/((Total assets at the beginning of the year + Total assets at the end…

Q: What will be Measures of Investment Performance Using Ratios?

A: It is always essential to evaluate the performance of the investments to decide whether the…

Q: Why doesn’t an estimated absolute covariance number tell the investor much about the relationship…

A: Sample Covariance means the in which the investor has not much information about the rate of return…

Q: explain the unique characteristics of the asset class, their associated risks and potential returns.…

A: The investments can be made using different assets basing on the risk capability and investment…

Q: How can we invest in two assets with dissimilar return characteristics?

A: Diversification is one of the tactics to keep in mind while forming a portfolio. Investing all the…

Q: Which of the following scenarios can increase the return on assets? a. Increase the current and…

A: Return on Assets = Net Profits / Total Assets

Q: is CAPM, Sharpe ratio, Treynor measures and Jensen’s Alpha used to Evalua

A: Step 1   Portfolio management involves trading between risk and return. Most novice investors make…

Q: What do the Asset management ratios measure?

A: Asset management (turn over) ratios compare an organization's assets with its turnover. Asset…

Q: How can we invest in multiple assets with dissimilar return characteristics?

A: Diversification is one of the tactics to keep in mind while forming a portfolio. Investing all the…

Q: Describe the process to invest in two assets with similar return characteristics?

A: The investment in any asset depends upon the risk and return of the particular asset and security.…

Q: Which method does not consider the time value of money? Choose the correct. A. Net present value…

A: Net Present Value or NPV is a technique which determines the net present value of the project and it…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.