This PPT slide, part of the 106-slide Corporate Performance Measurement PowerPoint presentation, presents a framework for understanding Economic Profit and its role in assessing corporate performance. At the core, Economic Profit (EP) is depicted as a critical measure of a company's ability to create or destroy value. The slide outlines the components that contribute to EP, starting with NOPAT (Net Operating Profit After Tax), which serves as the foundation for calculating operating profit. This highlights the importance of effective taxation in determining the net profit available for stakeholders.
The structure of the slide indicates that Gross Profit, along with A&P (Advertising and Promotion) and Overheads, are essential inputs in the calculation of operating profit. This suggests that a detailed understanding of these elements is necessary for accurate performance measurement. The inclusion of Net Working Capital and Capital Employed further emphasizes the financial aspects that influence Economic Profit.
The bullet points provide practical insights into the utility of Economic Profit. It is noted for its ease of use, relying on historical accounting records, which makes it accessible for analysis. The reference to GAAP (Generally Accepted Accounting Principles) implies that while traditional accounting measures are important, they may not fully capture the nuances of value creation. The slide also points out that Economic Profit can be used to evaluate the performance of various segments and can be projected into the future, allowing for strategic planning.
Lastly, the slide mentions that positive Economic Profits indicate a favorable market condition where the market price per share exceeds the book value per share, signaling growth and value creation. This comprehensive overview positions Economic Profit as a vital metric for executives aiming to drive long-term success.
This slide is part of the Corporate Performance Measurement PowerPoint presentation.
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Performance Management Shareholder Value Strategic Planning Performance Measurement Value Creation
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