NewsWire--DECEMBER 5, 1995

TOPIC: The Goals of the Corporation, Analysis of Financial Statements, Economic Value Added, Cost of Capital

SOURCE: "The Wealth Builders," by Betsy Morris; "A Conversation with Goizueta and Welch," by editors; "Creating Shareholder Wealth," by Anne B. Fisher, Fortune, December 11, 1995, 80-116.

SYNOPSIS: This series of articles presents the annual ranking of companies by Market Value Added (MVA), and provides a discussion of the two current MVA leaders, Coca Cola and General Electric, along with an interview with their chief executive officers. It offers an opportunity to discuss new types of performance measures (EVA and MVA) and to contrast them to more traditional measures such at Return on Investment (ROI).

DISCUSSION QUESTIONS:

1. What are Economic Value Added (EVA) and Market Value Added (MVA)?

2. How does EVA differ from Return on Investment (ROI) as a performance measure?

3. How do EVA and MVA relate to the goals of the firm?

4. How have Coca Cola and General Electric used EVA to make resource allocation decisions within the firms?