PHYSICS 102 Lecture Notes - Lecture 10: Income Statement, Deflation, Asset Turnover
Document Summary
Historical cost measurement and the use of dupont analysis by market participants. Curtis et al. , 2015: rq: investigate how modified hc measurement of assets affects the properties of financial ratios and whether these effects help to explain why investors appear to make forecast errors about asset utilization. Ato c = sales c / (noa r + noa u) Ato r = ato c (1+ noa u / noa r) If investors calculate ato using reported values, then they will have a biased measure of true economic efficiency. H1: reported asset turnover is positively associated with asset age. H 2: the persistence of reported asset turnover is positively associated with asset age. If asset utilization is constant in t and t-1, forecast errors change in the historical cost bias. H 3: asset turnover forecast errors are positively associated with changes in asset age.
