AFM241 Study Guide - Midterm Guide: Profit (Accounting), Asset Turnover, Profit Margin

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM241
• Professor: Theophanis Stratopoulos

Document Summary

Sustainable competitive advantage a firms ability to resist competitor"s attempt to imitate/improve on source of its competitive advantage. If rare and valuable, but easy to imitate, then temporary competitive advantage. Competitive parity i valuable, but not rare c competitive disadvantage i no firm will want to invest in resources and capabilities that are not valuable increase. In a perfectly competitive market, economic profit is zero! Measure of efficiency (ability to leverage assets) i operating income to asset/sales/employee (profit generated per dollar or or per employee) ii fixed asset/total asset turnover (sales/fa or ta - sales generated per dollar of ) iii. Ce (capital employed) = sum of equity and debt capital. If roic is greater than wacc, then ep/ce is positive and firm creates value . 5 business model a defines how firm delivers value to its customers, entices customers to pay for value and convert these payments into profits. Identify target market segments e walmart"s business model i ii.