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Case from journal
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Reference no. IECJ0114C
Published by: IMA - The Association of Accountants and Financial Professionals in Business
Originally published in: "IMA Educational Case Journal", 2008
Revision date: 28-Jan-2014

Abstract

As companies move through the decade of the 2000s, creating value for customers, shareholders, and other stakeholders has become an important objective in a globally competitive environment. This case uses the experience of a major multinational company based in Spain to develop a measurement of economic value created (EVC) as a surrogate within its management control system. The focus is not on ENDESA per se, but ENDESA as a vehicle to explore issues related to management control of value. Part A of the case focuses on financial management issues, involving computation of the metric based on cash flow, but also involves invested capital and the weighted average cost of debt and equity capital. Part B focuses on accounting and financial reporting issues and the interaction of management control systems with financial reports. The two parts of the case can be used independently.
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Abstract

As companies move through the decade of the 2000s, creating value for customers, shareholders, and other stakeholders has become an important objective in a globally competitive environment. This case uses the experience of a major multinational company based in Spain to develop a measurement of economic value created (EVC) as a surrogate within its management control system. The focus is not on ENDESA per se, but ENDESA as a vehicle to explore issues related to management control of value. Part A of the case focuses on financial management issues, involving computation of the metric based on cash flow, but also involves invested capital and the weighted average cost of debt and equity capital. Part B focuses on accounting and financial reporting issues and the interaction of management control systems with financial reports. The two parts of the case can be used independently.

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