History and development of accounting record


The focus of shareholder wealth



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Accounting and finance for managers MBA CH1
Accounting and finance for managers MBA CH1

The focus of shareholder wealth:

  • to obtain funds at competitive rates from capital markets and invest those funds to exploit imperfections in product markets.
  • Where this takes place, shareholder wealth is increased through dividends and increases in the share price.
  • Value-based management

    Capital and product market structure and interaction

    Value-based management… Cont…..

    Total shareholder return (TSR)

    • Compares the dividends received by shareholders and the increase in the share price with the original shareholder investment, expressing the TSR as a percentage of the initial investment.
    • Market value added (MVA)

    • is the difference between total market capitalization (number of shares issued times share price plus the market value of debt) and the total capital invested in the business by debt and equity providers.
    • This is a measure of the value generated by managers for shareholders.

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