Published by:
Harvard Business Publishing
Length: 11 pages
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https://casecent.re/p/47673
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Abstract
Earnings per share, return on investment, return on equity, and other conventional accounting-oriented approaches for evaluating corporate strategy fail to answer basic questions regarding the creation of shareholder value. With discounted cash flow analysis as a basis, the recommended shareholder value approach uses readily available data to determine the value-creating prospects for alternative strategies at the business unit and corporate levels. A case example illustrates the sequential steps of the shareholder value approach.
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Abstract
Earnings per share, return on investment, return on equity, and other conventional accounting-oriented approaches for evaluating corporate strategy fail to answer basic questions regarding the creation of shareholder value. With discounted cash flow analysis as a basis, the recommended shareholder value approach uses readily available data to determine the value-creating prospects for alternative strategies at the business unit and corporate levels. A case example illustrates the sequential steps of the shareholder value approach.