This PPT slide, part of the 101-slide Complete Guide to Value Creation PowerPoint presentation, presents a structured overview of Total Shareholder Return (TSR) and its three primary drivers: Fundamental Value, Valuation Multiple, and Free Cash Flow Yield. Each driver is essential for understanding the historical sources of TSR within an organization and its industry context.
Fundamental Value encompasses sales growth, margin changes, and EBITDA growth, which collectively influence the overall value generated for shareholders. The slide indicates specific contributions, such as a 4.2% increase from sales growth and a 3.6% rise from EBITDA growth, while margin changes negatively impacted by 0.6%. This highlights the need for organizations to focus on enhancing sales and EBITDA to bolster overall value.
The Valuation Multiple, driven by investor expectations, shows a change in the EBITDA multiple contributing 2.8% to TSR. This suggests that market perceptions and investor sentiment play a significant role in determining how the market values a company's earnings potential.
Free Cash Flow Yield is broken down into dividend yield and share change, contributing 2.9% and 2.4%, respectively. This indicates that returning cash to shareholders through dividends and share buybacks is a critical component of TSR.
The slide concludes with a notable insight regarding the technology sector: as companies grow larger and diversify their portfolios, generating high TSR becomes increasingly challenging. This emphasizes the importance of strategic focus and effective capital allocation in maximizing shareholder returns.
This slide is part of the Complete Guide to Value Creation PowerPoint presentation.
This presentation is created by former McKinsey, BCG, Deloitte, EY, and Capgemini consultants. It covers multiple Value Creation frameworks utilized by global strategy consulting firms.
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