When do companies really create value? A comparative synopsis of EVA, CFROI and EBM

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Authors

De Wet, Johannes H.v.H. (Johannes Hendrik van Heerden)

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Publisher

South African Institute of Chartered Accountants

Abstract

For some time now, it has dawned on the finance fraternity that there are weak relationships between indicators of shareholder wealth and the traditional accounting measures of financial performance. This realisation has sparked new interest in efforts to trace the real drivers of shareholder value in order to measure and incentivise company performance better and to deploy scarce resources more appropriately.

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Keywords

Expectations-based management (EBM), Cash flow return on investment (CFROI), Economic value added (EVA)

Sustainable Development Goals

Citation

De Wet, JHvH, 2010, 'When do companies really create value? a comparative synopsis of EVA, CFROI and EBM', Accountancy SA, pp. 24-26. [http://www.accountancysa.org.za/]