Managing for Value: EVA and Portfolio Strategy

How can a company manage for value? By carefully applying and interpreting the numbers in formulating and executing value-based strategies. That according to a managing partner at Stern Stewart & Co., the firm that developed and has perfected one of the more favoured measures for determining value, Economic Valued Added (EVA). In the article, he first describes why managers are too often drawn to business that seem, on the surface, attractive, but in fact actually destroy value. Using examples, he then proceeds to describe EVA, how most managers apply it (wrongly) and how to apply it to uncover and create real value.

Editor’s Note: The introduction is a bit dated, but don’t let that dissuade you from reading on, where you will gain some good insights into the EVA concept…

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