2015
DOI: 10.6007/ijarbss/v5-i5/1589
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Return on Capital and Cost of Capital: How does their Relation Affect Firm Value?

Abstract: The Great Recession of [2008][2009] hurt almost all of the companies' stock values in the United States. Interestingly, for Starbucks, the deterioration started a few years before the recession. From 2005 to 2007, the company's stock price declined by approximately 40%. This case encourages students to examine the company's return on capital, compare it to its cost of capital, and then relate this to the decline in the company's stock price. First, they will establish a single formula for return on invested ca… Show more

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