《财务管理》课程PPT教学课件（英文版）Chapter 13 Managing for Shareholder Value

Ch.13: Managing for shareholder value o 2002. Prentice Hall. nc

Ch. 13: Managing for Shareholder Value © 2002, Prentice Hall, Inc

Top Creators of shareholder value 999 invested cost of MVa capital return capital Microsoft328,25710,9545616%12.64% Gen elect285,32065,29819.29%11.92% Intel 16690223.62635.44%12.92 Wal-Mart159,44436,18813.24%9.82% Coca-Coa157,53613,31131.22%11.24%

Top Creators of Shareholder Value 1999 invested cost of MVA capital return capital Microsoft 328,257 10,954 56.16% 12.64% Gen Elect 285,320 65,298 19.29% 11.92% Intel 166,902 23,626 35.44% 12.92% Wal-Mart 159,444 36,188 13.24% 9.82% Coca-Cola 157,536 13,311 31.22% 11.24%

Market value added MVA=Firm value-Invested capital Firmⅴalue= market value of the firn’s outstanding debt and equity securities. Invested Capital the sum total of the funds that have been invested in the firm

Market Value Added MVA = Firm Value - Invested Capital Firm value = market value of the firm’s outstanding debt and equity securities. Invested Capital = the sum total of the funds that have been invested in the firm

Value creation The combination of opportunity and execution Opportunities must be recognized, and Employees must be ready, willing and able to take advantage of the opportunities

Value Creation • The combination of opportunity and execution. • Opportunities must be recognized, and • Employees must be ready, willing and able to take advantage of the opportunities

Business valuation The Accounting Model USing the p/e ratio: If a firm's pe ratio is 20. then a dollar increase in earnings per share will create S20 in additional equity value per share Problem: ignores r&D, which would reduce earnings per share, but should increase future earnings!

Business Valuation: The Accounting Model • Using the P/E ratio: • If a firm’s P/E ratio is 20, then a dollar increase in earnings per share will create $20 in additional equity value per share. • Problem: ignores R&D, which would reduce earnings per share, but should increase future earnings!

Business valuation Free Cash flow valuation model Value= the pv of the firms projected free cash flows for all future years

Business Valuation: Free Cash Flow Valuation Model • Value = the PV of the firm’s projected free cash flows for all future years

Business valuation Free Cash flow valuation model Value= the pv of the firms projected free cash flows for all future years Value= fcft fcft fcft. t terminal value (1+k)(1+k)2(1+k)3 (1+k)

Business Valuation: Free Cash Flow Valuation Model • Value = the PV of the firm’s projected free cash flows for all future years. Value = FCF + FCF + FCF + … + Terminal value ( 1+k)1 (1+k)2 (1+k)3 (1+k)n

Value drivers Variables that managers can tweak to increase firm value Examp es Sales growth operating profit margin net working capital to sales ratio property, plant and equipment to sales ratio cost of capital

Value Drivers Variables that managers can tweak to increase firm value. • Examples: • Sales growth • operating profit margin • net working capital to sales ratio • property, plant and equipment to sales ratio • cost of capital

Economic value added

Economic Value Added

Economic value added Net operating weighted average invested EVA rofit after pI cost of x capital tax(NOPAT)t capital(kwacd

Economic Value Added Net operating weighted average invested EVAt = profit after - cost of x capital t-1 tax (NOPAT)t capital (kwacc)