Discussions in this course are set up as Literature Review. You are supposed to compare and contrast the opinions of the authors of the articles provided in the weekly Learning materials, present the important information, data (if applicable), statistics (if applicable) to support your conclusions. It is important that the Literature review is written in your opinion with small quotes from the articles. All quotes must have references and in-text citation to support your sources.

Discussion Questions:

1. Discuss the difference between NOPAT and net income and explain which one is the better measure of a company's performance, and why?

2. Reply to the below classmate

Calculate the Economic Value Added for the company that you selected for the Company Analysis Project and critically evaluate the result?

Economic Value Added (EVA) calculation for Apple Inc. in 2023

First off, we need to grab some key numbers from Apple's 10-K report. We've got an Operating Income of $114,301 million and an effective tax rate of 14.7%. With these, we can calculate the Net Operating Profit After Tax (NOPAT) using this formula:

NOPAT = Operating Income (1 Effective Tax Rate)

NOPAT = 114,301 (1 0.147)Crunching the numbers, we end up with a NOPAT of $97,499 million.

Next up, we need to figure out the total capital, which is just the sum of total debt and equity. Apple's total debt comes in at $105,103 million, and its total equity is $62,146 million. So, let's add those up:

Total Capital = Total Debt + Total Equity

Total Capital = 105,103 + 62,146

This gives us a total capital of $167,249 million. Now, assuming a Weighted Average Cost of Capital (WACC) of 10% (which is pretty standard for big companies with solid credit ratings), we can finally calculate the EVA:

EVA = NOPAT (Total Capital WACC)

EVA = 97,499 (167,249 0.10)

And there we have it! Apple's EVA for 2023 is a whopping $80,774 million.Now, let's take a step back and think about what this EVA result really means. An EVA of $80,774 million is a pretty big deal. It shows that Apple created a ton of value above and beyond the required return on its capital in 2023. This impressive positive EVA highlights Apple's strong operational performance and how well it's using its capital. EVA is super important because it tells us how well a company is generating returns compared to its total cost of capital. With such a high EVA, Apple is not only covering its operating and capital costs but also creating a lot of value for its shareholders. This is a big accomplishment, especially considering how massive Apple's operations and capital base are. For investors and analysts, this EVA result is a clear sign that Apple is making smart strategic investments and operational decisions that are paying off big time. The company is generating returns that are way above the costs associated with its capital structure, which could mean that investing more in Apple is a pretty smart move. All in all, Apple's EVA for 2023 paints a picture of a company that's killing it in terms of profitability and resource management. It's a testament to Apple's strong position in the market and its ability to create serious value for its shareholders.