Corporate Perance Measurement（英文版）.ppt

Author PatrickCote Contributors KateMcGreevyJulianCritchlow bc CorporatePerformanceMeasurement April1999 Copyright 1999Bain Company Inc 2 CorporatePerformanceMeasurement ExecutiveSummaryObjectivesBackgroundPerformanceMeasurementFrameworkMarketValueAdded MVA EconomicProfit EP CashFlowReturnonInvestment CFROI ExercisesMVAEconomicProfitCaseStudy Diageo Agenda 3 CorporatePerformanceMeasurement Corporateperformanceevaluationhasevolvedfromthe1960sfocusonROEtothecurrentvariationsofeconomicprofitthatmeasureimpactonshareholdervaluemanyfirmshavedevisedtheirownvariationsofeconomicprofitSternStewart sEconomicValueAdded EVA TMisbestknownofthesemeasuresHolt BCG sCashFlowReturnonInvestment CFROI isasimilarconceptpresentedin returnformatBothROEandEParebusinessmetrics toolsusedtomeasuretheperformanceofthebusinessseparatefromfundamentalbusinessdrivers theactualfactorsthatinfluenceshareholdervalue andoutputmeasuresthebackward lookingrecordsofoverallcompanyperformanceFocusingonEPinsteadofROEdecreasesthelikelihoodofdestructivebehaviorbymanagersByevaluatingmanagersbasedonEP managerbehaviorcanbealteredsuchthatonlyprojectsthataddvalue withNPV 0 areundertaken whichdoesnotalwaysoccurwithROE ExecutiveSummary 1of2 4 CorporatePerformanceMeasurement ExecutiveSummary 2of2 EndgoalofEPexercisesisconsistentwithtraditionalBainfocusofmaximisingshareholdervalueBainhasmeasuredhistoricalperformancewithTotalShareholderReturnSternStewartdevisedMarketValueAdded MVA TMasmeansofmeasuringmarketexpectationsofEPthatmanagerswilladdinthefuturemanagers objectiveshouldbetomaximiseMVAAlleconomicprofitmeasuresdeductchargeforuseofequitycapitalfromaccounting stypicalnetincomeorprofitaftertaxtoreflecttheopportunitycostassociatedwithequityinvestmentsSternStewarthastrademarkedEVATMbyspecifyingadjustmentstomaketoEP 5 CorporatePerformanceMeasurement Agenda ExecutiveSummaryObjectivesBackgroundPerformanceMeasurementFrameworkMarketValueAdded MVA EconomicProfit EP CashFlowReturnonInvestment CFROI ExercisesMVAEconomicProfitCaseStudy Diageo 6 CorporatePerformanceMeasurement Objectives TherearethreeobjectivesoftheCorporatePerformanceMeasuresModule TodefinethemostpopularmeasuresofcorporateperformanceToexplainthesignificanceofthesemeasuresinthecorporateenvironmentandpotentialapplicationsinBain sstrategyworkTooutlinecalculationsofeachperformancemeasure 7 CorporatePerformanceMeasurement Agenda ExecutiveSummaryObjectivesBackgroundPerformanceMeasurementFrameworkMarketValueAdded MVA EconomicProfit EP CashFlowReturnonInvestment CFROI ExercisesMVAEconomicProfitCaseStudy Diageo 8 CorporatePerformanceMeasurement Withtheriseofconglomerates mostcompaniesfocusedonReturnonEquity orROE astheirprimarymeasureofperformanceledmostmanagerstoundertakeacquisitionssolelytomanipulateaccountingfigures 1960s 70s 1980s 90s Withtheincreasedfocusondeliveringshareholdervalue managershaveacceptedsystemsthatmeasurethechangeinvaluemanagersrealisedequityisnotfreeeconomicprofit EP meetstheseneedsbytellingmanagerswherevaluehasbeencreatedandwhereithasbeendestroyedAsaligninginterestsbetweenownersandmanagershasbecomemoreimportant tyingmanagementcompensationtoEPprovidedapopularsolution Corporateperformanceevaluationhasevolvedfromthe1960sfocusonROEtothecurrentvariationsofeconomicprofit EP thatmeasureimpactonshareholdervalue Background CorporatePerformanceEvaluation 9 CorporatePerformanceMeasurement BainwasthefirstofmajorconsultingfirmstofocusoncreatingshareholdervalueToachievethis BainhasusedtheoutputmeasureofTotalShareholderReturnandtheaccountingmeasuresofROEandROIModifiedaccountingmeasures suchasEP provideanalternativemeansofmeasuringthecreationofshareholdervalue Background RelevancetoBain 10 CorporatePerformanceMeasurement Toillustratetheroleofcorporateperformancemeasuresandresourceallocationtostrategywork anexaminationofMarakon s program isusefulMarakonappliesthefollowingprogram whichcantakeseveralyearstocomplete toallofitsclients assesstheeconomicprofitofallcustomersegmentsandproductlinescomparecompanyperformancetoindustryperformanceinvestigatethreeormorestrategiesforeachbusinesseveryplanningcycleshiftresourceallocationfromeconomicallyunprofitableproducts customerstoeconomicallyprofitableleadstoyieldlossforMarakonandclientssinceadditionalscenariosfrequentlyevaluated Marakonhasmadeeconomicprofit EP thecentralfocusofthe program theyapplytoeverycase Background LinktoStrategy 11 CorporatePerformanceMeasurement EVAisaregisteredtrademarkofSternStewart Acenturyago AlfredMarshallexplainedthatforacompanytohavegenuineprofits theprofitsmustbesufficienttocoverthecostofcapitalaswellasthefirm soperatingcostsSternStewarthasre packagedtheconceptintoEVA whichisessentiallyamorepalatableformofthesameideaMcKinseyhasbeenusingeconomicprofitformanyyearsBCGusesCashFlowReturnonInvestment CFROI forasimilaranalysisToavoidinfringinguponSternStewart strademark manyconsultingfirmshavedevelopedtheirowntermsforthesameconcept HownewisEconomicValueAdded EVA EVATMisonevariationofEP Background EconomicValueAdded 12 CorporatePerformanceMeasurement Agenda ExecutiveSummaryObjectivesBackgroundPerformanceMeasurementFrameworkMarketValueAdded MVA EconomicProfit EP CashFlowReturnonInvestment CFROI ExercisesMVAEconomicProfitCaseStudy Diageo 13 CorporatePerformanceMeasurement Measures ForadiscussionofWACCanddiscountrates pleaseseetheInvestmentAppraisalModuleintheBVU Description EVA MVA EP andCFROIaremodifiedaccountingmeasuresusedtomeasuretheperformanceofthebusiness Inputs Measures FundamentalBusinessDrivers BusinessMetrics OutputMeasures Primarybusiness specificfactorsinfluencingshareholdervalue Toolsusedtomeasureperformanceofbusiness Backward lookingmeasuresofoverallcompanyperformanceasviewedbymarket OperatingprofitsvolumepricecostsFinancialCostofCapitalEmployedfixedassetsworkingcapitalWACC AccountingROEROAModifiedaccountingEVA MVA EPCFROICVA TotalShareholderReturn TSR TotalBusinessReturn TBR Framework 14 CorporatePerformanceMeasurement Thefundamentalbusinessdriversprovideaframeworkforidentifyingthesourcesofshareholdervaluecreationordestruction ShareholderValueCreation Destruction OperatingProfit CostofCapital Volume Price Costs WorkingCapital WACC FixedAssets X X DirectcostsmateriallabourIndirectcostsSG ADepreciation Averagesellingprice ofunitssold WeightedaveragecostofcapitalbasedonmarketvaluesofdebtandequityUseafter taxcostofdebt Currentassetslesscurrentliabilities Property plant equipmentIntangibles LIFOvsFIFODepreciationestimates Costofequityforprivatefirms Intangiblemeasurement Components Issues Framework FundamentalBusinessDrivers 15 CorporatePerformanceMeasurement SometimesreferredtoasReturnonInvestment ROI ROEmeasuresreturnstoshareholders whileROAmeasuresreturnstoinvestorsofallformsofcapital Formula Measures ROA Profitabilityofallcapitalemployed includingdebt Uses ReturnonAssets ROA ReturnonEquity ROE NetIncome Assets ROE NetIncome Equity Profitabilityofequityinvestedinbusiness netequityissuedplusretainedearnings Returnsofenterpriseasawhole Returnstoshareholders Framework AccountingBusinessMetrics 16 CorporatePerformanceMeasurement TheDuPontformulaisusedtoseparateROEintoitscomponentsinordertoassesstheperformanceofthebusiness ROE NetIncome Equity NetIncome Sales Sales Assets Assets Equity X X ROS AssetTurnover Leverage ROE Profitability AssetTurnover Leverage X X ROA Framework AccountingBusinessMetrics DuPontFormula 17 CorporatePerformanceMeasurement EVA EVAwithdepreciationaddedback Manyconsultingcompaniesattempttobrandthemodifiedaccountingbusinessmetricstheyuse EconomicProfit Measure ConsultingCompanies BainMcKinseyMarakon throughValue BasedManagement LEK EVA MVA SternStewartATKearneyAccountingfirms BCG HoltBCG CashValueAdded CVA CashFlowReturnonInvestment CFROI Framework ModifiedAccountingBusinessMetrics 18 CorporatePerformanceMeasurement onlybackward looking Themodifiedaccountingbusinessmetrics whichincludeEP enablerelativelyaccuratelevelsofcorporateperformancemeasurementatlowerlevelsofdecisionmakingintheorganisation AccuracyasMeasureofCorporatePerformance LevelofDecisionMaking High Low Low High MVA ModifiedAccountingBusinessMetrics TSR ROE ROA FundamentalBusinessDrivers EP EVA CFROI RoleinOrganisation Framework 19 CorporatePerformanceMeasurement Adjustedforallstocksplitsandassumingalldividendsreinvested WhileTSRcalculatesreturntoshareholdersforpublicly listedcompanies BCG sTBRcalculationestimatesequivalentreturnsforprivately heldfirms TotalShareholderReturn TSR inCAGRFormat Marketvalueofshareatendofperiod Marketvalueofshareatbeginningofperiod TotalBusinessReturn TBR Estimatedmarketvalueofsharesofprivately heldcompanyatendofperiod numberofyears 1 numberofyears 1 1 1 Estimatedmarketvalueofsharesofprivately heldcompanyatbeginningofperiod Framework OutputMeasures 20 CorporatePerformanceMeasurement Bain sclientstockperformanceslideiscalculatedusingTSR whichisusedtomeasuretheshareholdervaluecreated Framework OutputMeasures 21 CorporatePerformanceMeasurement Agenda ExecutiveSummaryObjectivesBackgroundPerformanceMeasurementFrameworkMarketValueAdded MVA EconomicProfit EP CashFlowReturnonInvestment CFROI ExercisesMVAEconomicProfitCaseStudy Diageo 22 CorporatePerformanceMeasurement MarketValueAdded MVA InvestedCapital GoalofManagersshouldalwaysbetocreatemoreshareholdervalue ormaximiseMVA TotalMarketValueofFirm includesalldebtandequity Bain sfocushasalwaysbeentohelpthemanagementofthefirmtomaximiseshareholdervalue whichisequivalenttomaximisingMVA MarketValueAdded Definition 1of2 23 CorporatePerformanceMeasurement MVAequalsthetotalmarketvalueofthecompanylessinvestedcapitalornetassets EithertheOperatingorFinancingApproachcanbeused butBaintypicallyusestheOperatingapproach Note Short termnon interestbearingliabilities OperatingApproach TypicallyusedbyBain FinancingApproach MarketValueAdded Definition 2of2 24 CorporatePerformanceMeasurement ThefirststeprequiredtocalculateNetAssetswiththeOperatingApproachistoidentifyexcesscash whichistotalcashlesscashrequiredintheoperatingcycle Note Short termnon interestbearingliabilities Amount MarketValueAdded OperatingApproach ExcessCash 25 CorporatePerformanceMeasurement Next Theworkingcapitalrequirementsarethefirm snetinvestmentsintheoperatingcycle orthenetamountofshort terminvestmentrequiredtofundoperations Amount WorkingCapitalRequirements MarketValueAdded OperatingApproach WorkingCapitalRequirements 26 CorporatePerformanceMeasurement WhencalculatingMVA NetFixedAssetsisdefinedasNetPP EplusotherInvestment tangibleandintangible ThethirdandfinalsteptocalculateNetAssetsisNetPP E whichistheamountoflong terminvestmentrequiredtofundoperations Amount NetPP E MarketValueAdded OperatingApproach NetFixedAssets 27 CorporatePerformanceMeasurement Marketvalueadded MVA reflectsthemarketsexpectationsoftheEPmanagerswilladdinthefuture PercentofTotal MVAisthemarket sexpectationofdiscountedfutureEPs MarketValueAdded LinktoEP 28 CorporatePerformanceMeasurement AfterextensiveworkbyadiligentBainteam AcmeIndustriesisexpectedtogenerate 25Mineconomicprofitsnextyear whichisexpectedtogrowat3 forever Ifthecostofcapitalis13 andtheinvestedCapitalis 100M whatistheMVAandthemarketvalueofthecompany MarketValueAdded LinktoEP Example 29 CorporatePerformanceMeasurement AfterextensiveworkbyadiligentBainteam AcmeIndustriesisexpectedtogenerate 25Mineconomicprofitsnextyear whichisexpectedtogrowat3 forever Ifthecostofcapitalis13 andtheinvestedCapitalis 100M whatistheMVAandthemarketvalueofthecompany MVA PVofEPs 25M 13 3 250M MVA InvestedCapital 250M 100M 350M MarketValueoftheCompany MarketValueAdded LinktoEP Solution 30 CorporatePerformanceMeasurement EPmeasuresmanagers performanceinthepast sinceitrepresentsthemarketvalueaddedcreatedoveroneyear Note AssumesInvestedCapitalConstant MarketValueAdded LinktoEP 1of2 31 CorporatePerformanceMeasurement EPisusedtoevaluatemanagerperformancebecausethechangeinMVAoveraperiodoftimeismeasured Goalofcompany smanagersshouldalwaysbetomaximiseMVAWhenmanagersmakeanyinvestmentdecisions iftheprojectis value creatingNPV 0MVAincreasesvalue destroyingNPV 0MVAdecreasesReasonthatEPisthefocusofmostattentionisbecauseMVAisastockorwealthmeasure soMVAwillshowhowmuchvaluehasbeenaddedatthatpointintimeEPmeasurestheamountofvalueaddedoveraperiodoftime whichisfarmoreusefulwhenmeasuringmanagerperformance MarketValueAdded LinktoEP 2of2 32 CorporatePerformanceMeasurement WhichUKsectorswouldyouexpecttohavethehighestmarketvalueadded andthelowest WhichUKcompanieswouldyouexpecttohavethehighestmarketvalueadded andthelowest MarketValueAdded ActualPerformance 33 CorporatePerformanceMeasurement Banks integratedoilanddrugsweretheUKsectorswiththehighestmarketvalueadded Source SternStewart SundayTimes SectorMarketValueAdded Sept98 MarketValueAdded UKSectorPerformance 10Best 34 CorporatePerformanceMeasurement Distributors printandpackagingandconstructionhadthelowestmarketvalueaddedintheUK Source SternStewart SundayTimes SectorMarketValueAdded Sept98 MarketValueAdded UKSectorPerformance 10Worst 35 CorporatePerformanceMeasurement Shell s 69 5BofmarketvalueaddedisthelargestintheUK Source SternStewart SundayTimes CompanyMarketValueAdded Sept98 1998EVA B 1 506 0 416 0 803 0 710 0 402 0 024 1 400 0 231 n a 0 098 MarketValueAdded UKCompanyPerformance 10Best 36 CorporatePerformanceMeasurement BritishSteel s 3BofmarketvaluedestroyedwastheworstofBritain s200largestcompanies Source SternStewart SundayTimes CompanyMarketValueAdded Sept98 1998EVA B 0 071 0 012 0 054 0 087 0 050 0 108 0 120 0 320 0 284 0 352 MarketValueAdded UKCompanyPerformance 10Worst 37 CorporatePerformanceMeasurement Agenda ExecutiveSummaryObjectivesBackgroundPerformanceMeasurementFrameworkMarketValueAdded MVA EconomicProfit EP CashFlowReturnonInvestment CFROI ExercisesMVAEconomicProfitCaseStudy Diageo 38 CorporatePerformanceMeasurement DefinitionAdvantages DisadvantagesFrameworkUseinStrategyWork EconomicProfit Agenda 39 CorporatePerformanceMeasurement Definition 1of2 Note EconomicProfit EP OperatingProfit CostofCapital AmountofEquityCapitalInvested EconomicProfit EP isaresidualprofitconceptaccountingfortheopportunitycostofholdingcapital Amount Traditionalaccountingconceptofprofits EconomicProfit 40 CorporatePerformanceMeasurement Definition 2of2 Note NOPAT NetOperatingProfitAfterTax SeeAppendixfordetails WACC WeightedAverageCostofCapital EconomicProfitdeterminesacompany svaluecreationordestruction Easytouse basedonaccountingrecords forhistoricalvalues NotprisonersofGAAPCanbeusedtoshowrelativeperformanceofproducts segments regions etc inagivenyearCanbecalculatedforfutureyearsanddiscountedtoshowvaluecreationWhenEconomicProfitsarepositiveovertimevaluecreationispositivemarketpricepershareismorethanbookvaluepersharegrowthcreatesvalue EP NOPAT ChargeforCapitalEmployed OperatingProfit EffectiveTaxation InvestedCapital WACC GrossProfit A P NetWorkingCapital NetFixedAssets Overheads EconomicProfit 41 CorporatePerformanceMeasurement InordertounderstandEPitisimportanttogobacktothebasicincomestatement Whatdidweearn usingwhatweown IncomeStatement Whogetsaccesstotheseearnings 100 100 EBIT PAT Tax Interest Observations Debtprovidershavefirstaccesstotheinterestpaymentsdueonmoneylent Governmentstaxcorporateprofits Shareholders equityproviders haveaccesstoallresidualprofits afterpayinginterestandtax Note EconomicProfit EP OperatingProfit CostofCapital AmountofCapitalInvested KeyPrinciples AccesstoCompanyEarnings EconomicProfit 42 CorporatePerformanceMeasurement Note NIBL Non interestbearingliabilities Assetsareacompany seconomicresources itemswhichhavethepotentialtoprovidefuturebenefitstotheorganisationNIBLsrepresentafreesourceoffundstothecompany ItismoneylenttoafirmwithnochargeorexpectedreturnDebtisanyinterestbearingcapital includingpreferredstockShareholder sEquityistheaccountant sestimateofthevalueoftheshareholder sinvestmentinthecompanytotalassetslesstotalliabilities KeyObservations BalanceSheetMakeup Whatdoweown Assets NIBLs Debt Shareholder sEquity Howdidwepayforit 500 500 100 BalanceSheet Thebalancesheetseparateswhatisownedbythefirmfromhowitwaspaidfor UnderstandingtheBalanceSheet EconomicProfit 43 CorporatePerformanceMeasurement EconomicProfitBalanceSheet Note NIBL Non interestbearingliabilities InordertodeveloptheEPbalancesheet short termnon interestbearingliabilitiesmustberemovedandadjustmentsforaccountingdistortionsmustbemade Short termNIBLareremovedfromtheEPbalancesheetsincecapitalreturnsarenotexpectedontheamountsowed e g wagespayable EPBalanceSheetNetAssetsamountmaybemuchlargerthanthetraditionalaccountingvalueafteradjustmentsforaccountingdistortions e g addinginternally generatedintangibleassets aremade RegularBalanceSheet EPBalanceSheet FinancingApproach OperatingApproach EconomicProfit 44 CorporatePerformanceMeasurement DividendPolicy ThetraditionallinkageoftheIncomeStatementandBalanceSheetistheconnectionbetweennetincomeandretainedearningsordividends Incomeattributabletoshareholders EBIT Interest Tax Cash in fromshareholdersperspective Cash out fromshareholdersperspective NetIncome RetainedEarnings Dividends ManagementDecision ReinvestitintheCompany DistributeittoShareholders IncomeStatementandBalanceSheetTraditionalLink 1of2 EconomicProfit 45 CorporatePerformanceMeasurement EconomicConsequence ThetraditionallinkageoftheIncomeStatementandBalanceSheetistheconnectionbetweennetincomeandretainedearningsordividends RetainedEarnings NetIncome Dividends Revenue Costs IncomeStatement BalanceSheet Assets Liabilities CurrentAssets NetFixedAssets OtherAssets NIBLs Debt Equity IncomeStatementandBalanceSheetTraditionalLink 2of2 EconomicProfit 46 CorporatePerformanceMeasurement Ifyoucouldbuythesamefactoryfor 100K butcouldonlyfinance70 withdebtandrequiredequityfortheremaining30 howmuchafter taxprofitwouldyourequiretobreak even assumetaxrate 40 assumecostofequity 15 Break EvenExample 70 Debt 30 EquityRevisited EconomicProfit 47 CorporatePerformanceMeasurement Ifyoucouldbuythesamefactoryfor 100K butcouldonlyfinance70 withdebtandrequiredequityfortheremaining30 howmuchafter taxprofitwouldyourequiretobreak even assumetaxrate 40 assumecostofequity 15 Debt Equity 70K 7 30 15 1