engleski

Comparison Between the Traditional and New Measures of Performance based on Shareholder Value Creation

The increasing number of participants in the capital market, as well as the increasing number of institutionalised investors, has created new trend sin business. Large part of these trends reflects in the understanding of the reasons of existence and goals of the company business operations. In the context of such consideration, the company business operations are successful only if the company menages are able to fulfill the goal of creating the value added, i.e. to increase the wealth of the shareholders. Traditional measures of performance, which are based on accounting measurement, have been subjected to many criticism, which emphasize many shortcomings. Because these measures are not adequate for measuring the new value added, academic community, as well as the consulting firms, have presented "new" measures of performance. The basic goal of this paper is to review the criticism pointed to the traditional measures, to review some of new measures of performance, and to make comparison between the traditional and new measures of performance based on the fulfillment of criteria set by the basic purpose of the company business, that is, increase of its value.

Profit related measures of performance; value based management; value based performance measures; economic value added; cash flow return of investment; shareholder value added

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