This PPT slide, part of the 101-slide Complete Guide to Value Creation PowerPoint presentation, presents the TSR (Total Shareholder Return) Decomposition Model, which breaks down the components contributing to TSR. It emphasizes 3 main drivers: fundamental value, valuation multiple, and free-cash-flow yield. The model quantifies how each driver impacts overall TSR, which is calculated at 9.6% in this example.

Under fundamental value, the slide highlights sales growth at 4.2%, a margin change of -0.6%, and EBITDA growth of 3.6%. These figures suggest a mixed performance, with sales growth being a positive contributor, while margin changes detract from overall value. The reinvestment section indicates that taxes also play a role in determining free cash flow, although specific tax impacts are not detailed.

The valuation multiple section shows an EBITDA multiple change of 2.8%, indicating that market perceptions of the company’s earnings potential have a significant effect on TSR. This reinforces the importance of how external factors can influence shareholder returns.

The free-cash-flow yield segment breaks down further into dividend yield (2.9%), share change (2.4%), and net debt change (-2.1%). The overall free-cash-flow yield stands at 3.2%, which is critical for understanding how cash generation and distribution affect shareholder value.

The note at the bottom suggests that these figures are illustrative and can be used to challenge existing assumptions about what drives TSR. This model serves as a valuable tool for executives looking to analyze and optimize their strategies for enhancing shareholder returns.

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Shareholder Value Value Creation Dividend Yield Sales