Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 40

Return on Investment (ROI) for Innovative Companies A survey by BusinessWeek and the Boston Consulting Group identified the world's 25 most innovative companies, looking at three dimensions of innovation: process innovation, product innovation, and business model innovation. The top five companies were Apple, Google, 3M, Toyota, and Microsoft. The top 25 companies were great performers over the 10-year period 1995-2005. The 25 companies had an average return on sales of 3.4% in comparison to 0.40% for Standard Poor's Global 1200 Stock Index. The top 25 stock returns, based on increase in stock price and dividends over this 10-year period, averaged a 14.3% annual return, in contrast to the 11.1% return for the S ¦ P Global 1200. These companies are surpassing the Global 1200 companies in part because of superior innovation.
Required What are the issues to consider in calculating the return on investment (ROI), residual income (RI), and economic value added (EVA ) for a highly innovative company