Open AccessEVALUATION OF FINANCIAL PERFORMANCE USING VALUE ADDITION METRICS – A SELECT STUDY OF 'IT' COMPANIES IN INDIA
Author(s) -
Sangeeta Pratap,
J. Revathy
Publication year - 2017
Publication title -
scholarly research journal for interdisciplinary studies
Language(s) - English
Resource type - Journals
eISSN - 2319-4766
pISSN - 2278-8808
DOI - 10.21922/srjis.v4i37.10790
Subject(s) - shareholder , economic value added , viewpoints , earnings , value (mathematics) , market value added , order (exchange) , shareholder value , return on investment , finance , business , investment (military) , earnings per share , market value , accounting , economics , microeconomics , computer science , corporate governance , art , machine learning , production (economics) , incentive , politics , political science , law , visual arts
In today’s competitive world, value and wealth creation for shareholders are among the most important goals of businesses. For the sake of achieving his goals, the investor needs some instruments in order to measure the potential value of each investment opportunity. It is clear that these instruments are not capable of predicting the exact future, they just provide some piece of information and advice that help the investor in the decisions he makes. Among these criteria, the most common types are Return on Investment (ROI) and Earnings per Share (EPS). Despite the numerous applications of these instruments, theoretically, they are not related with shareholders’ value or wealth creation. In recent years, the modern evaluation techniques based on economic theories such as Economic Value Added (EVA), Market Value Added (MVA) and Shareholder Value Added (SVA) replace the accounting data-based criteria and have widely drawn the attentions. These criteria follow the performance assessment with regard to the changes in the value and alongside maximizing the long term shareholder returns. In this research paper, one of the most important criteria; i.e. Shareholder Value Added (SVA), is investigated from several viewpoints.