SVA is an approach to Financial management developed in 1980s, which focuses on the creation of economic value for shareholders, as measured by share price performance and flow of funds. SVA is used as a way of linking management strategy and decisions to the creation of value for shareholders. The investment, business and financial decisions, both strategic and operational, are [...]
There are four methods for estimating the working capital requirements of a firm. The methods are: 1. Percentage of Sales Method 2. Regression Analysis Method 3. Operating Cycle Method 4. Individual Components Method. 1. Percentage of Sales Method: It is a traditional and simple method of determining the level of working capital and its components. In this method, working capital [...]
EFR is calculated with the help of following formula, when other ratios remain constant: Where, A/S = Total assets/Sales L/S = Current liabilities and provisions/Sales ∆S = Expected increase in sales over current year (S-S1) S = Sales of current year S1 = Projected sales of next year D = Dividend payout ratio M = Net profit margin The expected [...]