You are a research analyst for a publicly traded company, and you’ve been assigned to give a presentation on how a company uses performance metrics in corporate valuation.
Respond to the following in a minimum of 175 words:
- Think about how you would present return on equity (ROE) and earnings per share (EPS) to a group of investors or senior management.
- Explain the use of ROE and EPS in evaluating the value of a company. Include how to calculate ROE and EPS (show the formula and an example with numbers).
- Why is understanding ROE and EPS important to a company’s value?
- Share an example of a company whose ROE and EPS you calculated. What do these results say about the company? Are they important by themselves or is comparing them with an industry average critical?