Valuation of company assets for return on investment (ROI)
This week’s discussion is about valuation of company assets for purposes of computing return on investment (ROI). Use the following scenario for your discussion:
A company owns two identical apartment buildings.
* Both buildings were built at the same time.
* The first building was acquired by the company ten years ago.
* The second building was acquired by the company two years ago at a higher price.
* The net book value of the first building will be much lower than the net book value of the second building due to accumulated depreciation and a lower purchase price.
* Each building has a different manager.
For your post, prepare 3–4 paragraphs about managing these properties. Discuss how to measure the ROIs so that the manager of the older building does not show a much higher ROI, even if actual job performance is worse in terms of keeping the units rented and containing maintenance costs.
For this discussion, consider the following scenario:
You are the division manager of a company with four departments. Your company evaluates department managers on the basis of return on investment (ROI), with investment measured by net book value (that is, original cost minus depreciation). You have a favorite person you want to put in a place where she can achieve a high ROI. You know if she is the manager of the older division, where the net book value is low, she will achieve a high ROI.
Post a discussion of 2–4 paragraphs about the ethics of this scenario. Consider for your post:
* The ethics of what you are about to do.
* The ethics of not bringing the measure of ROI with the investment defined as net book value to the attention of management.
* What is your “return on investment” to your current or potential employer?
* How can you continue to demonstrate your value to enhance your career?
* Identify a professional achievement you are proud of. Using the CARD model, draft an accomplishment statement that showcases this achievement
clearly and concisely and add it to your resume.
* How does your resume present your value to a potential employer? See the resources in the Career Center on building a dynamic resume.
Refer to the following article for a good overview of ethical considerations that will help inform your post:
* Robin, D. (2009). Toward an applied meaning for ethics in business. Journal of Business Ethics, 89(1), 139–150.
You are not required to know generally accepted accounting principles (GAAP), as you are not studying to be an accountant. However, GAAP is important, as all publicly traded companies must use GAAP in their accounting and reporting practices. So, it is important to you, as a manager, for compliance reasons. Recognizing the existence of GAAP and the reasons for using non-GAAP reporting can be important to your job as a business manager.
For this discussion, read the articles and textbook page below, and then post a discussion of 3–4 paragraphs about GAAP and non-GAAP reporting. Consider as part of your post:
* Your beliefs about the pros and cons of reporting company performance using non-GAAP measurements.
* Your understanding of the reasons for the reconciliation between GAAP and non-GAAP reporting in the Campbell’s Soup financial statements on page 645 of your textbook.
You are not expected to be an expert; look at this discussion post as a manager. If you have questions, include them in your post.
The following resources will be useful in preparing this discussion post:
* Afterman, A. B. (2015). Non-GAAP performance measures: Virtue or vice? The CPA Journal, 85(10), 48–49.
* Diffley, E. A, & Greenstein, A. (2016). Presenting non-GAAP financial measures in the face of increased scrutiny. Insights, 30(6), 3–9.
* Marshall, D., McManus, W., & Viele, D. (2020). Accounting: What the numbers mean (12th ed.). New York, NY: McGraw-Hill. Available in the courseroom via the VitalSource Bookshelf link.
* Read page 648.