Capital Deployment and Total Shareholder Return

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• 3 ratio components of Return on Equity (ROE) are described and illustrated.

  EXAMPLE — Sales for the year were $ 480,000, beginning total assets was $ 505,000 and year-end total assets are $ 495,000. The Asset Turnover Rate is $ 480,000 / $ 500,000 (average total assets which is $ 505,000 + $ 495,000 / 2) or .96.

• Capital Budgeting

  88114 Capital budgeting Which capital budgeting technique is consistent with maximizing shareholder wealth and why? The Net Present Value (NPV) technique is consistent for shareholder wealth maximization.

• Thomas Lane Company: calculate return on equity and return on equity ratio

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• Definition of Return on Equity

  EXAMPLE — Net Income for the year was $ 60,000, total shareholder equity at the beginning of the year was $ 315,000 and ending shareholder equity for the year was $ 285,000.

• Capital Valuation Methods

  502721 Capital Valuation Methods 1. A stock had a price at the beginning of the year of $100 and was selling for $102 at the end of the year. If the total shareholder returns were 5 percent, then the cash dividend per share must have been what?

• Using Baumol's model, design an alternative cash management policy and calculate the cost savings that the alternative policy would achieve.

  Explain how the company's credit policy with regards to accounts receivable may affect shareholder wealth. 3. Briefly describe an aggressive working capital management strategy and identify the associated risk- return trade-offs.

• stakeholder value maximization

  shareholder's equity and total shareholder's equity.

• Estimated share price

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• Capital Budgeting Techniques..

  As a result, the firm wins and the shareholder gains an attractive return on their respective investment dollars. Now let's return to why we need to understand the cost of capital associated with long term investing.