Strategic performance measures

Overview:

In the current economic climate the reliance on the markets to determine the true worth of an organisation, through the metric of Market Value Added (MVA) has been challenged. More organisations have argued that the true worth of an organisation is its ability to generate cash for investors. As such it is argued an organisation that wishes to maximise investor wealth should adopt the principles of Shareholder Value Analysis (SVA) and make managers accountable for the decisions that they make and the impact that this has on the value of the company. These are taken one step further when consideration is given to whether traditional management accounting concepts of cost encourage managers to make short term decisions. Economic Value Added (EVA) theory argues that certain costs should be viewed as investments and performance measured appropriately.

Learning Outcomes:

On completion of this course, participants will have a greater understanding of:

  • The Use of Market Value Added (MVA) as a performance metric and its limitations
  • Why cash is king in the current environment and how the concept of Shareholder Value Analysis (SVA) can encourage managers to take decisions that truly enhance the value of a company
  • Whether traditional management accounting concepts of cost encourage managers to take the wrong decisions
  • The debate between cost or investment and the principle of Economic Value Added EVA).

Authored by: Garry Buick ACMA, CGMA

Garry has had extensive experience with GlaxoSmithKline, including a number of area finance director roles in the manufacturing division. He also worked in China as a key member of the implementation team for low cost product sourcing.

CPD Points: 1

CPD Duration (hours): 1

Access: 12 months from purchase date

Price (excludes VAT): £35.00