What is Total Return and how do companies make financial decisions based on it?
Total Return is the increase from an investment, typically expressed in percentage form. Total return, measures the performance and is the actual rate of return upon the investments over a given evaluation period. Total return usually includes interest, capital gains, dividends and distributions realized over a given period of time.
Total Return when typically expressed in percentage form can be put as:
Total Return = Net Return ÷ Initial Investment
Total return determines an investment’s true growth over time and used when analyzing a company’s historical performance and calculating the expected future return on reasonable expectations of the investor’s investments. An investor has to keep two other factors in mind; time and risk. The Investor also has to list all the possible options that an Investment avenue can pursue, estimating the numbers (initial investment, gross return, timing, and risk), rank the options from greatest return to least return.
What is Total Return and how do companies make financial decisions based on it?
Provide an overall summary of how companies make financial decisions based on Stock Valuation, Total Return, CAPM, WACC and Flotation Costs.
What are flotation costs and how do companies make financial decisions based on it?
What is Stock Valuation and how do companies make financial decisions based on it?
What is WACC (weighted average cost of capital) and how do companies make financial decisions based on it?
What is CAPM (Capital Assets Pricing Model) and how do companies make financial decisions based on it?
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