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?
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