Economics, Econometrics and Finance
5 years ago

Unlocking Company Value: How WACC Drives Capital Growth and Success

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Weighted average cost capital (WACC) and its influence on the changes in the indicators characteristic for creating value of a company’s capital
Merab Jikia, Elene Kharabadze

Paper Summary

The article discusses how companies are shifting from focusing on maximizing profits to maximizing value through Value Based Management. This new approach emphasizes key value factors and strategic tasks. To measure value creation, indicators like economic profit, economic value added, market value added, share value added, and cash flow return on investment are used. These indicators show that value is only created when the actual return on investment exceeds the expected income.

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