Identify various factors that can influence a companies primary goal of maximizing shareholders wealth.
Identify various factors that can influence a companies primary goal of maximizing shareholders wealth.
SourceQuote:
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
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.
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