Value creation - as a valuation method of a listed company

Abstract

The financial analysis of the companies listed on the stock market involves specialized research concerning the performance of economic and financial activity in order to diagnose the value created or destroyed for stakeholders (shareholders, creanciers, owners, employees). The paper presents some theoretical concepts concerning the basic tools utilised in value-based management. It is focussed on performance by the value creation for the stakeholders of a company. For this reason, the fundamental analysis of the company's performance utilizes more metric tools based on added value, as Economic Value Added - trade-marked by Stern Stewart & Co, and several of its derivatives: Market Value Added (MVA) and Cash Value Added (CVA). All these indicators prove the management performance in the value creation for investors and depend on the net operating income and the cost of invested capital. Accordingly to financial theory, EVA and its derivatives are considered as a management tools because the goal of the company is to add value as much as possible over the cost of invested capital. It must demonstrate how sensitive these tools are to the influence of various factors. For this reason, analysis based on accounting uses more methods for listed companies valuation. Some such methods are the problems that our paper addresses.