Which of the following statements about asset valuation is FALSE?
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A. B. C. D.B
EVA measures management's ability to add value to the firm. One of the problems with the EVA calculation is that it is not measured relative to the capital invested in the firm. As a workaround, the ratio of EVA to capital is used, and it is this ratio that measures the economic profit generated per dollar of invested capital.
The other statements are true. Use Porter's five forces to determine the level of competition within an industry and to determine the company's strategy for dealing with that competition. Do not forget about the impact of foreign competitors!