Corporate Performance MeasurementPPT.ppt

CorporatePerformanceMeasurement Agenda Executive Summary (1 of 2) Executive Summary (2 of 2) Agenda Objectives Agenda Corporate Performance Evaluation Relevance to Bain Link to Strategy Economic Value Added Agenda Measures Fundamental Business Drivers Accounting Business Metrics Accounting Business Metrics - DuPont Formula Modified Accounting Business Metrics Role in Organisation Output Measures Output Measures Agenda Definition (1 of 2) Definition (2 of 2) Operating Approach - Excess Cash Operating Approach - Working Capital Requirements Operating Approach - Net Fixed Assets Link to EP Link to EP - Example Link to EP - Solution Link to EP (1 of 2) Link to EP (2 of 2) Actual Performance UK Sector Performance - 10 Best UK Sector Performance - 10 Worst UK Company Performance - 10 Best UK Company Performance - 10 Worst Agenda Agenda Definition (1 of 2) Definition (2 of 2) Key Principles: Access to Company Earnings Understanding the Balance Sheet Economic Profit Balance Sheet Income Statement and Balance Sheet Traditional Link (1 of 2) Income Statement and Balance Sheet Traditional Link (2 of 2) Break-Even Example - 70% Debt / 30% Equity Revisited Break-Even Example - 70% Debt / 30% Equity - Solution Agenda Advantages Advantages (1 of 3) Advantages (2 of 3) Advantages (3 of 3) Disadvantages Beware: Capital is in the Ratio Formula Common Pitfalls Agenda Framework NOPAT Discount Rates - Framework Discount Rates - Two Different Definitions of EP Discount Rates Accounting Adjustments Accounting Adjustments - Stern Stewart Accounting Adjustments - Stern Stewart’s Mechanics Accounting Adjustments - Selection Criteria Short-Cut Approach (Excludes Adjustments) Agenda Use in Strategy Work Optimum Information Level Use in Strategy Work Guidelines Agenda Definition Cash Flow Return on Investment - CFROI Framework (1 of 6) Cash Flow Return on Investment - CFROI Framework (2 of 6) Cash Flow Return on Investment - CFROI Framework (3 of 6) Cash Flow Return on Investment - CFROI Fram