【正文】 ssumes Invested Capital Constant M a r k e t V a l u eA d d e d * T o d a yM a r k e t V a l u eA d d e d * L a s t Y e a rE c o n o m i c P r o f i tO v e r L a s t Y e a rMarket Value Added Link to EP (1 of 2) 30 CorporatePerformanceMeasurement bc Corporate Performance Measurement LON EP is used to evaluate manager performance because the change in MVA over a period of time is measured ?Goal of pany?s managers should always be to maximise MVA ?When managers make any investment decisions, if the project is: –valuecreating NPV 0 MVA increases –valuedestroying NPV 0 MVA decreases ?Reason that EP is the focus of most attention is because MVA is a stock or wealth measure, so MVA will show how much value has been added at that point in time –EP measures the amount of value added over a period of time, which is far more useful when measuring manager performance Market Value Added Link to EP (2 of 2) 31 CorporatePerformanceMeasurement bc Corporate Performance Measurement LON ?Which UK sectors would you expect to have the highest market value added? –and the lowest? ?Which UK panies would you expect to have the highest market value added? –and the lowest? Market Value Added Actual Performance 32 CorporatePerformanceMeasurement bc Corporate Performance Measurement LON B a n k s I n t e g r a t e d O i lD r u g sM e d i aF o o dM a n u f a c t u r e r sT e l e c o m sR e t a i l e r sG r o c e r sE l e c t r i c i t yD r i n k s1 0 2 . 59 4 . 38 9 . 34 2 . 93 8 . 73 6 . 13 3 . 81 8 . 51 7 . 2 1 6 . 802550751 0 0163。Author: Patrick Cote Contributors: Kate McGreevy Julian Critchlow bc Corporate Performance Measurement April 1999 Copyright169。 1999 Bain Company, Inc. CorporatePerformanceMeasurement bc Corporate Performance Measurement LON ? Executive Summary ? Objectives ? Background ? Performance Measurement Framework ? Market Value Added (MVA) ? Economic Profit (EP) ? Cash Flow Return on Investment (CFROI) ? Exercises –MVA –Economic Profit ? Case Study Diageo Agenda 2 CorporatePerformanceMeasurement bc Corporate Performance Measurement LON ? Corporate performance evaluation has evolved from the 1960s focus on ROE to the current variations of economic profit that measure impact on shareholder value –many firms have devised their own variations of economic profit –Stern Stewart?s Economic Value Added (EVA)TM is best known of these measures –Holt/BCG?s Cash Flow Return on Investment (CFROI) is a similar concept presented in % return format ? Both ROE and EP are business metrics, tools used to measure the performance of the business –separate from fundamental business drivers, the actual factors that influence shareholder value, and output measures the backwardlooking records of overall pany performance ? Focusing on EP instead of ROE decreases the likelihood of destructive behavior by managers –By evaluating managers based on EP, manager behavior can be altered such that only projects that add value (with NPV0) are undertaken, which does not always occur with ROE Executive Summary (1 of 2) 3 CorporatePerformanceMeasurement bc Corporate Performance Measurement LON Executive Summary (2 of 2) ? End goal of EP exercises is consistent with traditional Bain focus of maximising shareholder value –Bain has measured historical performance with Total Shareholder Return –Stern Stewart devised Market Value Added (MVA)TM as means of measuring market expectations of EP that managers will add in the future –managers? objective should be to maximise MVA ? All economic profit measures deduct charge for use of equity capital from accounting?s typical ine or profit after tax to reflect the opportunity cost associated with equity investments –Stern Stewart has trademarked EVATM by specifying adjustments to make to EP 4 CorporatePerformanceMeasurement bc Corporate Performance Measurement LON Agenda ? Executive Summary ? Objectives ? Background ? Performance Measurement Framework ? Market Value Added (MVA) ? Economic Profit (EP) ? Cash Flow Return on Investment (CFROI) ? Exercises –MVA –Economic Profit ? Case Study Diageo 5 CorporatePerformanceMeasurement bc Corporate Performance Measurement LON Objectives There are three objectives of the Corporate Performance Measures Module: ?To define the most popular measures of corporate performance ?To explain the significance of these measures in the corporate environment and potential applications in Bain?s strategy work ?To outline calculations of each performance measure 6 CorporatePerformanceMeasurement bc Corporate Performance Measurement LON Agenda ? Executive Summary ? Objectives ? Background ? Performance Measurement Framework ? Market Value Added (MVA) ? Economic Profit (EP) ? Cash Flow Return on Investment (CFROI) ? Exercises –MVA –Economic Profit ? Case Study Diageo 7 CorporatePerformanceMeasurement bc Corporate Performance Measurement LON ?With the rise of conglomerates, most panies focused on Return on Equity, or ROE, as their primary measure of performance –led most managers to undertake acquisitions solely to manipulate accounting figures 1960s/70s 1980s/90s ?With the increased focus on delivering shareholder value, managers have accepted systems that measure the change in value –managers realised equity is not free –economic profit (EP) meets these needs by telling managers where value has been created and where it has been destroyed ?As aligning interests between owners and managers has bee more important, tying managem