The best measure for performance is to look at the discounted cash flow model of a company. The comparison of the economic profits relative to the expectations of economic profit is a one period measure, while the discounted cash flows attempt to look at the performance of the company over many time periods into the future. I have found that when I correlate the discounted cash flow estimates of the value of a company with the actual market value of that company I get correlations of 80% and above.
Like this content? Why not share it?
There Are No Comments
Click to Add the First »
Click to Add the First »