Internet Exercises

12-1. Economic Value Added is becoming an important tool in the analysis of how a particular company is doing. The web-site address www.snc.edu/socsci/chair/333/eva_ndex.htm contains readings on Economic Value Added. Review the readings - particularly the reasoning behind the use of this analytic tool, and how Economic Value Added is calculated.

1. Review the readings and summarize them.
2. What is the basis for the use of this analytic tool. Why does it offer better insight into how well a company is doing than other measures? The material lists several other references. If necessary consult them for information on the merits of this tool.
3. The Coca Cola Company is listed as a user of this approach. Refer to Coca-Cola's web-site at www.coke.com. This site will require accessing several links. Remember you are an investor, and you want to look at the annual report. Coke's term is economic profit. Review the method of calculating this figure from the readings, and determine how Coke calculated their number.

12-2. Visit the Toronto Stock Exchange site at www.tse.com and choose any three listed companies, each with a different line of business.

1. For each of these corporations, calculate the Return on Equity for the most recent two years. (A fairly simple calculation will suffice.) You may need to use the SEDAR web site at http://www.sedar.com/ to obtain financial information or go to the corporation's web site and look under their investor relations web link.
2. Where the change in the ROE appears to be large, try and formulate a reason for the change.
3. Compare the ROE for the different corporations in the different lines of business. Arrive at a conclusion as to why different industries have different ROE's.