Log in

View Full Version : Maximizing shareholders wealth


ete83
Feb 1, 2007, 01:36 AM
Identify various factors that can influence a companies primary goal of maximizing shareholders wealth.

CliffARobinson
Mar 12, 2012, 06:58 AM
As shareholder value is difficult to influence directly by any manager, it is usually broken down in components, so called value drivers. A widely used model comprises 7 drivers of shareholder value, giving some guidance to managers:

Revenue
Operating Margin
Cash Tax Rate
Incremental Capital Expenditure
Investment in Working Capital
Cost of Capital
Competitive Advantage Period

Source (http://en.wikipedia.org/wiki/Shareholder_value)

Often, internal business plans reflect one or more of the 7 items above so that managers and executives are making decisions based on maximizing Shareholder Value and the bottom line.