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Maximise Shareholder value (MSV) (Long term focus (Increase investments,…
Maximise Shareholder value (MSV)
What is it?
Risk Capital
Investment
Get profits
Return on investment
Dividends
Short term focus
Maximise profits
Reduce costs
Reduce investments
Negative long term impact
Long term focus
Increase investments
Increase innovation/R&D
Decrease profits
Increase costs/debt
Short term loses/unsustainable
Short term profitability
ROCE (Return on capital employed)
how much
profit from resources
Considering
Long term debt
capital invested
good returns
Value created/captured
ROE (return on equity)
how much
net profit
from capital invested
Value for owners
AUR ( Asset utilisation Ratio)
Ability to Create Value
Efficiency in
Generating sales
From capital employed
Ratio's against competitiors
ROS (Return on sales)
Worthwhile market position?
Ability to capture value
Generate return on sales
Sales revenue
Good profits
long term performance
Profit growth
Increase
Net profit
over time
ROE
ROCE
Market Value
Equals
share prices x no of shares
Measure makes assumptions
shares correctly valued
Lack in depth information