Shareholder Value Explained
2nd Edition
Published on 9. February 2001
Book
Paperback/Softback
128 pages
978-0-273-65303-5 (ISBN)
Description
Today companies come under intense pressure to create and measure shareholder value. Managers need to get to grips with performance measures in order to do so. But which of the numerous value creation models should you adopt? This best-selling briefing - now revised and updated in a second edition - provides a much needed independent review of the different value creation models and offers practical advice on how such a system should be implemented. The viability of alternative approaches is assessed through practical examples. The briefing then explores the ways in which you can maximise shareholder value at both strategic and operational levels within your company.
Contents include:
Financial performance measurement in context
Operational measures of business performance
Shareholder ratios
Economic value added
Other approaches to measuring shareholder value at corporate level
Cascading shareholder value measures into the business
Value based management
Case studies
Features new content on:
economic value added (EVA)
total shareholder return (TSR)
cashflow return on investment (CFROI)
updated case study material
Contents include:
Financial performance measurement in context
Operational measures of business performance
Shareholder ratios
Economic value added
Other approaches to measuring shareholder value at corporate level
Cascading shareholder value measures into the business
Value based management
Case studies
Features new content on:
economic value added (EVA)
total shareholder return (TSR)
cashflow return on investment (CFROI)
updated case study material
More details
Series
Edition
2nd edition
Language
English
Place of publication
Harlow
United Kingdom
Publishing group
Pearson Education Limited
Target group
Professional and scholarly
Dimensions
Height: 297 mm
Width: 210 mm
Thickness: 10 mm
Weight
500 gr
ISBN-13
978-0-273-65303-5 (9780273653035)
Copyright in bibliographic data and cover images is held by Nielsen Book Services Limited or by the publishers or by their respective licensors: all rights reserved.
Schweitzer Classification
Persons
Alan Warner is a qualified chartered management accountant, formerly Directorof Studies at Ashridge Management College and a founding member of the Management Training Partnership (MTP). He has written a wide range of articles on financial, management and HR issues appearing in The Times, Management Today, Personnel Management and all the major accounting journals. In recent years his writing efforts have been concentrated on a unique trilogy of books that are all in the form of novels which make difficult topics easy to understand and apply.
Alison Hennell is a chartered accountant, having qualified with Coopers & Lybrand. She moved into management training when she joined MTP in 1995 and recently moved on to a freelance capacity.
The Management Training Partnership was formed in 1987 by three senior staff at Ashridge Management College and has rapidly grown to become one of the largest UK-based providers of tailored management training. MTP designs and delivers tailored programmes in three core topic areas: Finance, Marketing/Strategy and Behavioural Skills. The Partnership has a range of blue-chip clients including Unilever, British Airways, BP and Boots, and employs 17 full-time tutors, all specialists with management experience.
Alison Hennell is a chartered accountant, having qualified with Coopers & Lybrand. She moved into management training when she joined MTP in 1995 and recently moved on to a freelance capacity.
The Management Training Partnership was formed in 1987 by three senior staff at Ashridge Management College and has rapidly grown to become one of the largest UK-based providers of tailored management training. MTP designs and delivers tailored programmes in three core topic areas: Finance, Marketing/Strategy and Behavioural Skills. The Partnership has a range of blue-chip clients including Unilever, British Airways, BP and Boots, and employs 17 full-time tutors, all specialists with management experience.
Content
List of figures
Preface
List of abbreviations
The broader context of financial performance measurement
WYMIWYG - what you measure is what you get!
The implications of WYMIWYG for shareholder value measurement
The creation of shareholder value
The problems of applying the shareholder value equation to measure performance
The benefits of an integrated and balanced performance measurement system
Operational measures of business performance
The objectives of financial analysis
Key operational measures
The cascading power of ROCE
Cash flow analysis - the operational perspective
Shareholder ratios
Ratios from published accounts
Ratios from stock market information
The impact of gearing
Cash flow
Economic value added
What is EVA?
How to derive EVA
Other adjustments to arrive at economic profit
The issues of understandability and credibility
Calculation of the cost of capital
A summary of the arguments for EVA
Actual versus incremental EVA
Other approaches to measuring shareholder value at the corporate level
Market value added
The basis of share price valuation
The concept of total shareholder return
The implications for top management of publicly quoted companies
The link between TSR and EVA
Cascading shareholder value measures into the business
The calculation of current and terminal values
Creating value by beating expectations
Applying the TBR framework
Linking the old to the new
Unilever - a case study of TBR implementation
Cash flow return on investment
How to calculate CFROI
Business valuations
Changing the mindset
From measures to management
Value-based management
What is value-based management?
Stage 1 - understanding value creation
Stage 2 - value-based performance measures
Stage 3 - communication
The pitfalls of shareholder value
The benefits of shareholder value
Two case studies - success and failure
Appendix: measuring shareholder value through the use of discounted cash flow techniques
References
Preface
List of abbreviations
The broader context of financial performance measurement
WYMIWYG - what you measure is what you get!
The implications of WYMIWYG for shareholder value measurement
The creation of shareholder value
The problems of applying the shareholder value equation to measure performance
The benefits of an integrated and balanced performance measurement system
Operational measures of business performance
The objectives of financial analysis
Key operational measures
The cascading power of ROCE
Cash flow analysis - the operational perspective
Shareholder ratios
Ratios from published accounts
Ratios from stock market information
The impact of gearing
Cash flow
Economic value added
What is EVA?
How to derive EVA
Other adjustments to arrive at economic profit
The issues of understandability and credibility
Calculation of the cost of capital
A summary of the arguments for EVA
Actual versus incremental EVA
Other approaches to measuring shareholder value at the corporate level
Market value added
The basis of share price valuation
The concept of total shareholder return
The implications for top management of publicly quoted companies
The link between TSR and EVA
Cascading shareholder value measures into the business
The calculation of current and terminal values
Creating value by beating expectations
Applying the TBR framework
Linking the old to the new
Unilever - a case study of TBR implementation
Cash flow return on investment
How to calculate CFROI
Business valuations
Changing the mindset
From measures to management
Value-based management
What is value-based management?
Stage 1 - understanding value creation
Stage 2 - value-based performance measures
Stage 3 - communication
The pitfalls of shareholder value
The benefits of shareholder value
Two case studies - success and failure
Appendix: measuring shareholder value through the use of discounted cash flow techniques
References