What is the rate of return on invested capital? How is it calculated?
What will be an ideal response?
The rate of return on invested capital is the free cash flow of the firm divided by the firm's total assets. If the firm is earning its weighted average cost of capital, the rate of return on invested capital should equal its WACC. If we think of an investment that the firm is making, the rate of return on capital expenditure is the incremental free cash flow divided by the CAPX. Here again, it is important for the firm to do investments in which the rate of return on invested capital equals or exceeded the WACC – otherwise the firm is destroying value.
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A quick response (QR) inventory management system seeks to _____
a. decrease inventory ordering costs b. decrease delivery lead time from vendors c. increase the quantity discounts available to a retailer d. decrease inventory holding costs
In a short essay, discuss why the expression "Think globally, act locally" oversimplifies the complexities of global competition for MNEs. What kinds of competition does the firm face as a result of following through with this advice?
What will be an ideal response?