The paper explores a few hidden problems of the reinvestment rate assumption. The automatism of net present value method creates and applies a very special reinvestment rate assumption. This assumption does not disturb the evaluation of investment projects with orthodox cash flow patterns. However, in the case of unorthodox cash flow patterns, automatism constructs a serious mistake in the calculations. In this case, the net present value provides wrong information about the economic efficiency. However, according to the general academic opinion, the net present value method is suitable for evaluation in the case of unorthodox cash flow patterns as well, as there can be only one net present value as opposed to the opportunity of several internal rates of return. The paper sets out to prove that this way of evaluation is wrong, and works out a solution based on the real economic basis.
This paper shows that the various rating calculation methods of business efficiency calculations are built according to an unified logic system. It provides an overview of the rich methodological background and presents a transparent system picture. The analysis shows that the general return requirement is the starting point for business efficiency calculation methods, pointing out that only those methods of calculation are suitable for measuring business efficiency which are logically consistent with the general return requirement. It shows also the essentials of the mixed profit categories and presents and interprets the method elements of business efficiency calculations, which can be used to construct various calculation formulas for different business matters. The uniform logic system of method elements may form a guiding thread when selecting and evaluating the correctness of the method used. The paper draws attention to the fact that a number of efficiency-computing conceptions obviously fail to comply with the general return requirement and consequently in such cases may also be preferred less efficient or even inefficient variants.
The practical usability of research results is a special advisory function of business economics. Of great importance is in teaching the science-based business knowledge as well. The paper presents the main problems related to practical usability of business economics summarizing more than four decades of research results of the author on this aspect. The examined disciplinary problems are the questions of terminology, some mechanical takeovers from microeconomic topics, some financial decision-making recommendations based on so methodology which does not fit for actual practice, and finally scientifically unresolved issues originating within business economics. Among the latter are: some unclear relations of profitability indicators, product ranking by contribution margin ratios, problematic return requirement sharing for products by cost or price proportions, cost-related cross-sectional analysis and some methodological problems of project evaluation. Clarifying these questions is fundamental for professional education. This is also important for business economists and in particular small and medium-sized enterprises, since their opportunities for in-depth methodological research are very limited.
At Pearson, we have a simple mission: to help people make more of their lives through learning.We combine innovative learning technology with trusted content and educational expertise to provide engaging and effective learning experience that serve people wherever and whenever they are learning.We enable our customers to access a wide and expanding range of market-leading content from world-renowned authors and develop their own tailor-made book. From classroom to boardroom, our curriculum materials, digital learning tools and testing programmes help to educate millions of people worldwide -more than any other private enterprise.Every day our work helps learning flourish, and wherever learning flourishes, so do people.To learn more, please visit us at: www.pearson.com/uk MANAGEMENT AND ORGANIZATIONCONCEPTS FOREWORDThe book, "Management and Organization: Concepts, Tools and Applications" was designed to make an overview on the most recent questions of modern management issues. The editors' aim was to summarize the relevant concepts, tools and applications which might help in the successful operation of different organizations. The international group of authors presented a wide variety of topics from different fields and functions of management. The challenge of this book was to distill the knowledge and findings of authors from different countries and to interpret their experiences to be useful at international -or rather global -level. The book starts with the introduction of the changes and challenges of our world: the changes in the natural and economic environment, which generate new theories, methods and needs.The second chapter provides an outlook on the most recent management tools of production processes, quality management, human resource management, public relations and corporate social responsibility based on the experiences and research results of authors from different countries. The third chapter summarizes some applications and innovative methods by which the management of any organization is able to follow the accelerated rate of technological and social development processes. Our book was written by an international group of authors for a wide audience, so it provides a unique source of knowledge for academics, researchers, students and professionals in different fields of the economy: business sphere, education and the public sphere. We believe that the work and results of our authors will lead the reader to see the new concepts, tools and applications in contemporary management issues and to find the possibilities and opportunities for using them in the future. Regarding the benefits of digital mastery, the three authors draw a simple data-based conclusion: profitability of digital masters is significantly higher than that of the other three groups. The worst case is that of the beginners, with many firms in the red. The position of fashionistas and conservatives is better but they also drop well behind the masters. The researchers also analysed digital mastery by industry and found signifi...
This paper examines the economic content of the positive net present value of a project type that is loss-making and has two internal rates of return. The most important finding is that the economic content of a positive net present value is false in such cases. The financial source of the missing amount to reach the level of business efficiency is a false interest income generated by the method. In such cases, the two internal rates of return are also derived from false interest income. The revealed and mathematically proved causality relationships usually prevail in some form in the case of other types of non-conventional cash flows as well.
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