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Reliance Industries: Economic Value-Added Analysis
內容大綱
A financial consultancy analyst received an assignment to assess the long-term performance of Reliance Industries Ltd., a multinational conglomerate based in India. The assignment had resulted from a share price rise for Reliance Industries. On April 27, 2022, the company’s share price reached its peak of ₹2,776. Consequently, a few of the financial consultancy’s clients had requested information regarding the long-term performance of Reliance Industries. The analyst was therefore tasked with calculating the economic value added in order to evaluate the company’s performance.
學習目標
The exercise is suitable for fundamental performance evaluation modules of corporate finance and strategic finance courses at the undergraduate and graduate level. Calculating the economic value added of a target company also enables students to understand the methods used to determine the cost of equity, cost of debt, weighted average cost of capital, and beta. After working through this exercise, students will be able to<br><br\><ul><li>define the conceptual aspects of economic value added analysis;</li><li>understand the methods for calculating the cost of equity, debt, and weighted average cost of capital;</li><li>understand the importance of net operating profit after taxes and how to calculate it; and</li><li>calculate the weighted average cost of capital, beta, and economic value added of Reliance Industries.</li></ul>