Enterprise Value, Measure of Performance Management
Enterprise Value, Measure of Performance Management

Summary/Abstract: Performance management can be measured by financial and non-financial indicators, but those that can credibly quantify it are the indicators that reflect the increasing of the enterprise value (EVA, GW, MVA, NAV, CFROI). Therefore the purpose of management decisions is to increase the value of the company. Nowadays there are economic theories according to which the company management should be led by a single objective, namely the growth of the value of the company. According to authors who based themselves on former studies and other research on this topic, there has been shaped the idea that this should be the central objective and all the other objectives like strategy, methods and management techniques should result out of that. Financial performance (NP, FCF, Value added) as a classic reference of efficiency of the activity was replaced in time by the company value, considering that this synthetically indicator takes into account the internal and external risks and the financing costs of the company. The decisions to increase profits, cash flow, dividends are not always the best. Motivation to increase enterprise value is manifested by the shareholders (increase their wealth), managers, potential investors (hopes to have gains), employees (high salaries, good working conditions), creditors (loans, low risk and high yield), customers (low cost, high quality) and state (higher taxes, more jobs).

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