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Focus On Value

a book on firm valuation by James Grant. The goal of valuation (for management decisions or for external investors) is:

  • assess whether the company generates a good return on existing assets
  • examine risk to value relation in a Cost of Capital framework
  • invest positively for economic profit growth
  • understand the magnitude of external influence
  • reconcile market with fundamental expectations of economic profit growth

Few frameworks are used internally:

  • Economic Value Added
  • Risk Adjusted ROCE
  • Shareholder Value Added