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CHAPTER 3 COMPANY PERFORMANCE AND MEASURES OF VALUE ADDEDa

Pamela P. Peterson, CFA, and David R. Peterson

This chapter compares the advantages and disadvantages of such traditional measures of firm performance as return on investment with those of more recent performance measures—economic value added, market value added, and cash flow return on investment. The authors use 1993 financial data from Hershey Foods Corporation, and they conclude that the usefulness of a method depends on the analyst’s purpose.

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