Key Management Ratios, 4th Edition

17

Shareholder value added (SVA)

Introduction

• Description
• Approach to valuation (1)
• Approach to valuation (2)
• Value for the equity shareholders
• Discount factor
• Terminal (continuing) value
• Complete model

Capital, in the sense of capital value, is simply future income discounted or, in other words, capitalised.

IRVING FISHER (1867–1947)

Introduction

In chapter 12 we looked at various stockmarket ratios and traditional approaches to the measurement of corporate performance and value. These have been in use for many years, they are still widely used and they have served the business community well. However many practitioners have now come to the conclusion that something more is needed.

Global competition, worldwide recession, and complex ...