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Exhibition:
Corporate returns (or performance) and corporate resources Introduction: In the figure below each
of the corporate returns (green highlight) can be associated with a
corporate resource (yellow highlight). One may ask why the standard
corporate balance sheet does not include other resources than debt and
equity. One answer may be that the firm does not control those resources as
much as they control debt and equity and therefore they are less relevant to
include in the balance sheet. However, just because we usually only measure
a return on equity and / or a return on 'total' assets it does not imply
that these are the only return measures. E.g. if it was worth the money we
could also measure the combined return from equity, debt and human capital.
The figure's perspective of corporate performance is deeply rooted in the
classis theory of finance, because each stakeholders' economic value of
dealing with the firm could be calculated as the present value of the
stakeholders' future cash flows (actual returns) that accrue from the
relation with the firm. This exhibition is made by ideas from a figure in
Copeland, Koller, and Murrin [1995, page 24]. |
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Other kinds of corporate resources
are: 3) Human capital.
4) Public
infrastructure
of importance for the firm. 5) Resources that suppliers dedicate
to generate the suppliers return. 6) Resources that consumers
dedicate to searching and evaluating the firm's products. |
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- Copyright 1997-2008, ViamInvest. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Legal notice. |
