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CHAPTER 10: FINANCIAL PERFORMANCE MEASURES AND THEIR EFFECTS

Primary objectie o! !or"#ro$t $rm i% to ma&imi'e %(are(o)*er a)+e or $rm a)+e, -(ic(i% a )o./"term, !+t+re"orie.te* co.ce#tS+mmary

Mea%+re%1 Maret

mea%+re%

Mea%+re% t(at re2ect

c(a./e% i. %toc #rice%or %(are(o)*er ret+r.%

Financial#er!orma.ce mea%+re%

" De.omi.ate* i. c+rre.cy 3e/ 4+arter)y#ro$t% o! 5167m8

" Ratio o! $.a.cia) .+mber% 3e/ 5017

EPS or ROE8" C(a./e i. $.a.cia) .+mber% 3e/ 119

ear.i./% /ro-t(8

7 Acco+.ti./

mea%+re%

Residual terms:Net

i.come a!ter ta&e%,

o#erati./ #ro$t, re%i*+a)

i.come, EA

Ratio terms: ROI, ROE,

ROA3.et a%%et%8; Combi.atio.%

o! mea%+re%

I.o)e t(e +%e o! eit(er

t+#e o! %+mmary

mea%+re% , or bot(, #)+%

%ome *i%a//re/ate*$.a.cia) mea%+re% 3e/

ree.+e, ee.%e%8

a.*

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CHAPTER 10: FINANCIAL PERFORMANCE MEASURES AND THEIR EFFECTS

Di%a*a.ta

/e

Ca+%e %+bo#timi'atio., a !orm o! be(aio+ra) *i%#)aceme.t