- Which Company Potentially Should Have Higher Value Hint The Earlier The Company Invests In R D The Higher Market Valu 1 (62.55 KiB) Viewed 38 times
- Which Company Potentially Should Have Higher Value Hint The Earlier The Company Invests In R D The Higher Market Valu 2 (18.71 KiB) Viewed 38 times
Which
company potentially should have higher value? Hint: The earlier the
company invests in R&D, the higher market value it has (this is based on empirical evidence). The timing when a firm invests in R&D can be captured by R&D per sales. The higher R&D per sales implies the earlier a
company spends on R&D. Again, use forecasted number to analyze because it provides forward looking info. Use below information (in thousands) to answer the
questions. Forecasted numbers are the numbers that are based on analyst's forecasts. That is, T-Mobile's forecasted revenue of $600,000 is the revenue analysts forecasted in 2019 T-Mobile will have in 2020. T-Mobile AT&T 2019 2019 650,000 30% 350,000 300,000 240,000 forecasted number 600,000 25% 400,500 199,500 300,000 2,500,000 125% 2,900,000 -400,000 1,000,000 forecasted number 4,500,000 70% 3,000,505 1,499,495 1,500,000 Sales revenue Sales growth Cost of goods sold Gross profit Research and development expense R&D growth Selling, general and administrative expense Interest expense Net profits before taxes Net profits after taxes Stock price per share Number of employees in thousands 110% 110,000 150% 1,200,000 150% 1,500,000 35,000 -85,000 -65,000 $85 4 150% 150,000 30,000 -280,500 -200,000 26,000 -2,626,000 -1,508,178 $38 9 20,000 -1,520,505 -939,221 6 15
T-Mobile because it has higher human capital value Hard to tell because T-Mobile has invested earlier on R&D but AT&T has higher human capital value O AT&T because it has higher forecasted gross profit O T-Mobile because it has lower variable and fixed costs