14.12 Measuring value creation Flashcards
1
Q
What is “Total Shareholder Return” (TSR) and how is it calculated?
A
The amount returned to investors, equal to capital gain/loss plus dividend.
TSR = (selling price + dividends received - purchase price) / (purchase price)
2
Q
What is market value added (MVA), and how is it calculated?
A
The value of a company as a result of its operation in the market. i.e. the increase in value since company formation.
MVA = market value - capital
