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Financial Times Handbook of Corporate Finance, 2nd Edition by Glen Arnold

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9

ENTIRE FIRM VALUE MEASUREMENT

IntroductionTotal shareholder return (TSR)Wealth Added Index (WAI)Market Value Added (MVA)Excess return (ER)Market to book ratio (MBR)ConclusionNotes

Introduction

This chapter describes five ‘market-based’ measures of value performance. The feature common to all these measures is the focus on the stock market’s valuation of the company. Total shareholder return (TSR) measures the rise or fall in the capital value of a company’s shares combined with any cash payment, e.g. dividends, received by shareholders over particular periods of time, be it one year, three years or ten years. This gets to the heart of the issue for owners of companies – what return do I get on my shares from the activities of the managers ...

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