Journal of Management Excellence - Creating Value

Sponsored By Oracle

Topics:

Business Software

Finance & Risk Management

View White Paper now

Free registration is required

Abstract:

The principles underlying TVI are as old as control theory. Accountants audit a company by aligning money, information, and the flow of goods-or core business processes, in more modern terms. It begins to go wrong when information is lacking or when money flows do not align anymore to the core business process. TVI is not the only performance indicator that aims to predict business success. The most well known indicator is economic value added (EVA) which includes a charge against profit for the cost of capital. With this charge, EVA penalizes inappropriate behaviors at least in X3 and X4. But EVA will not tell you if your strategy to create value is "right". Another indicator-aimed at predicting bankruptcy-is Altman's Z-score. But again, this indicator does not account for "fairness". There are many initiatives aimed at measuring and managing intangible value such as social responsibility and morality, but most do not claim to have any predictive value for company success. However, TVI alone is not enough.

DETAILS

Sponsored by:

Released: October 22, 2009

Length: 22 pages

Format: PDF (528 kb)

Email this abstract

These white papers are not created by the CFO.com editorial staff. In order to view these papers, you must register with CFO.com and agree to share your contact information with related product/service companies.

Search White Papers