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Economic Value Statements (EVS) are a product of an empirically-based process to better explain how corporate stock prices are influenced by corporate strategies and strategic assets. They are based on an extensive and growing knowledge base designed to help senior management and sophisticated investors deal with and better explain the factors underlying the intrinsic value of a stock.
Economic Value Statements foster better communication, insight and accelerated learning of management and investment teams of strategies that produce value. They provide a reality check on discounted cash flow models by evaluating and systematically considering the strategic factors that produce returns above or below a corporation's cost of capital in an empirically-determined way. Value Statements build on our extensive business strategy and stock price models by quantifying strategic assets such as:
The result is a better understanding of how strategic assets and organizational effectiveness contribute to stock prices that are above or below book value and a way to balance conflicting investment opportunities.
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