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To view this page ensure that Adobe Flash Player version 9.0.124 or greater is installed. ANALYZING ENTERPRISE VALUE Previous studies used the common performance measures of sales, market value, profit, and net margin when comparing companies. We also looked at this family of performance measures, but calculated them in different ways so as to impart new insights on the comparison (see the previ-ous discussion on averages). We considered the potential impact of the operate/nonoperate deci-sion not just on the companies themselves but on shareholder value; that is, the financial rewards earned by shareholders in these companies. The measures we incorporated in our analysis are described on the next page. PROFITABILITY Profitability metrics are used to measure the firm’s operational ability to generate income based on its productivity and utilization of assets. For this study, profitability was measured using a 5-year5 compound annual growth rate (CAGR) formula. CAGR represents the smoothed annualized gain earned over a given time horizon and is widely used, in part because of its dampening effect on volatility of periodic returns that can render arithmetic means irrelevant. We analyzed four com-mon profitability metrics using a CAGR analysis: ..Revenue Growth – Year-over-year increase/decrease in “top-line” sales, 2003-2007 ..Earnings Growth – Year-over-year increase/decrease in “bottom line” net income, 2003-2007 ..EBIT Growth – Year-over-year increase/decrease in Earnings Before Interest and Taxes, 2003-2007 ..EBITDA Growth – Year-over-year increase/decrease in Earnings Before Interest, Taxes, De-preciation, and Amortization, 2003-2007 SHAREHOLDER VALUE In explaining changes in shareholder value, we identified the “drivers” of that value. We performed a statistical analysis that demonstrated a linkage between a company’s financial performance and the value ascribed to it by shareholders. ..Total Shareholder Return – Our analysis assumed that an investor made a hypothetical investment of one dollar in each of the 423 companies on December 31, 2002. We then de-termined how much that basket of one dollar investments was worth on December 31, 2007, five years later. We considered the appreciation of the stock price (on a split-adjusted basis), as well as the value of dividends paid by the companies over that period. We assumed that dividends were reinvested into the company’s stock on an annual basis, rather than retained as cash. For this purpose, the following formula is used: Total Shareholder Value = ($ Share price) + ($ Accrued dividends). 中国公务机网 www.gongwuji.com 公务机翻译 www.aviation.cn 本文链接地址：BUSINESS AVIATION – AN ENTERPRISE VALUE PERSPECTIVE 2003 – 2009(22) |
