National saving includes public and private saving. Household saving typically constitutes a major part of private saving compared to private corporations (Gersovitz, 1988; Rehman, Bashir, & Faridi, 2011). Saving is an important way to improve the well-being of household. It allows households to smooth consumption in case of high income volatility and increase the opportunity to invest in physical and human capital (Ashraf et al., 2003). For households, the tradeoff between current and future consumption results in saving (Sturm, 1983).
As the firms progress as a growing concern towards maturity, they lean towards paying dividends as well as limiting the availability of free cash flows at the control of management. The authors observe the earned/contributed capital mix (measured by the ratio of retained earnings to total equity or total assets) as a key determinant of dividend policy, controlling for profitability, growth, firm size, total equity, cash balances, and dividend history. The ratio is employed by DeAngelo, DeAngelo and Stulz (2006) to identify each firm position along its life cycle. When firms are in the high growth stage, they depend heavily on the external sources to fund their investments owing to their low earnings capacity. Thus ratio of retained earnings to total equity or total assets will be low for young high growth firms.
Return on equity measures the company's profitability by measuring how much profit a company generates comparing with the money shareholders have invested. Return on Equity = Net Income available to common stockholders common stockholder Equity ANON= HAS DEFICIT ULTA= 26% REVLON= HAS DEFICIT 4. Efficiency Ratios The efficiency ratio is used to measure how the company uses its assets and liabilities internally, these ratios to measure the performance in short term. • Accounts Receivable Turnover This ratio used to measure the firm's effectiveness in extending credit and in collecting debts. The receivables turnover ratio is an activity ratio measuring how successfully a In collecting its AR during the year, if the company has AR turnover 2 that means the AR turned over two times during the year.
Stages of maturity and stability, higher earnings are prompting firms to provide advantages from the use of debt. And it suggests and agency theory, firms managed by the owner, has the lowest debt ratio, which will tend to gradually increase its development. This process will be followed by the issuance of new shares as well as specialized hiring
(WACC) = 0.6× [(1-0.44)10.25] + 0.4 × 18.49 = 10.83% Did you use arithmetic or geometric averages to measure rates of return? We used arithmetic average to determine the annual rate of return. As rate of return calculated using arithmetic average gives higher return compared to geometric average, investors are more likely to estimate their future return based on arithmetic average measure. Hence we use arithmetic average to measure the rate of return to match the expected rate of return required by investors. What type of investments would you value using Marriott’s WACC?
The most basic application of the Lucas model is to price equity in an economy with i.i.d. consumption growth and a representative infinitely lived and intertemporally maximizing consumer with time-separable utility. Over the past decades, numerous studies have investigated the effects of relaxing various assumptions of this model to explain financial market phenomena such as the remarkable variation in asset prices and expected stock returns, the development and bursting of bubbles, and the puzzling high equity premium. Mehra and Sah  suggested that elasticity offers a simple but powerful representation of the influence of fluctuations in the denominator variable on the volatility of the numerator variable. More importantly, elasticity is unit-free, and thus can be considered a convenient measurement that captures sentiment induced fluctuations in financial markets.
Harrod – Domar Model The Harrod – Domar is considered as an ‘old’ growth model that asserts that investment and savings are the prime factors of economic growth. The equation above is the essence of the model. It states that the difference between the product of MPK (marginal product of capital) with the rate of saving and the rate of depreciation of capital is equal to the growth rate. This implies that increasing the savings rate, increasing the capital stock or reducing the depreciation of capital will all result in increased economic growth. Thus a positive, direct relationship can be observed between the aggregate savings rate and growth of the economy so growth is determined by the savings rate according to this model.
This Figure 3.1 show the relationship of stock market returns (KLCI) with four macroeconomic variables involved in this study which are money supply, exchange rate, inflation rate and crude oil price. KLCI is a major stock market index which tracks the 30 largest companies performance by full market capitalization listed on the Bursa Malaysia’s Main Board. The stock market return is the returns that investors generate out of the stock market. The four macroeconomic variables will be explained as below: 3.1.1 Money supply In this paper, money supply is represented by M2 monetary aggregate. M2 can be defined broader classification of the money supply than M1, because it includes assets that are highly liquid but not cash.
Accounting analysis techniques used in this research report are 1. Trend analysis focusing on the operating income and net profit 2. Ratio analysis on profitability, liquidity, solvency and efficiency and comparison of ratios with industry competitors. Trend Analysis: Trend analysis is used to reveal the trend of items for a certain period and is used in combination with ratio analysis to spot a particular trend, explore the causes for the trend and make necessary preparation for future projections (Vishal and Anchal, 2015). Ratio Analysis: Ratio analysis is the technique of calculating a number of accounting ratios from the figures found in the financial statements, and then compare the ratios with those of previous years or similar activities,
They are the production approach, the income approach, or the expenditure approach. In this research, the way of estimating GDP is by using the second approach- income approach. In this approach, an economist believes that the money each family brings home is a better way to evaluate the economic strength of the country. Therefore, this method will measure the annual incomes of all individuals in a country. GDP calculated in this way is sometimes called as gross domestic incomes (GDI).