Understanding ROI and TSR: Investor Insights PPT

This PPT slide, part of the 31-slide Value Creation Framework Series: Direct Levers PowerPoint presentation, presents a critical analysis of the relationship between Return on Investment (ROI) and Total Shareholder Return (TSR), emphasizing the importance of understanding these metrics from an investor's perspective. It highlights that traditional Value-Based Management (VBM) approaches focus primarily on achieving an ROI above the cost of capital. However, this narrow focus may not align with investor expectations, which extend beyond mere ROI figures.

The left chart illustrates the average ROI over the past 5 years across different quartiles of the S&P 500, indicating that companies with lower ROI can still be attractive investments if they show potential for improvement. The right chart forecasts the TSR for the next 5 years, suggesting that simply having a high ROI does not guarantee superior TSR. Investors are more interested in companies that can enhance their ROI beyond expected levels or demonstrate significant reinvestment growth.

The text also underscores a key takeaway: high ROI businesses cannot remain complacent. They must continuously strive for improvement, while low ROI businesses have the opportunity to enhance their attractiveness by increasing their ROI. This nuanced understanding of ROI and TSR is essential for investors aiming to make informed decisions about their investments.

The slide serves as a reminder that performance metrics should be viewed holistically, considering both historical data and future potential. Investors must look beyond surface-level ROI figures to assess the true value and growth prospects of a company.

This slide is part of the Value Creation Framework Series: Direct Levers PowerPoint presentation.

Download the Full Presentation

EXPLORE MORE SLIDES FROM THIS PRESENTATION

EXPLORE MORE PRESENTATIONS ON

Value Based Management Value Creation Return on Investment

Are you familiar with Flevy? We are you shortcut to immediate value.

Flevy provides business best practices—the same as those produced by top-tier consulting firms and used by Fortune 100 companies. Our best practice business frameworks, financial models, and templates are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience.

Trusted by over 10,000+ Client Organizations

Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.

Flevy is the world's largest knowledge base of best practices.

Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.

Read Customer Testimonials

"FlevyPro provides business frameworks from many of the global giants in management consulting that allow you to provide best in class solutions for your clients."

– David Harris, Managing Director at Futures Strategy

"As a consulting firm, we had been creating subject matter training materials for our people and found the excellent materials on Flevy, which saved us 100's of hours of re-creating what already exists on the Flevy materials we purchased."

– Michael Evans, Managing Director at Newport LLC

"As a consultant requiring up to date and professional material that will be of value and use to my clients, I find Flevy a very reliable resource.

The variety and quality of material available through Flevy offers a very useful and commanding source for information. Using Flevy saves me time, enhances my expertise and ends up being a good decision."

– Dennis Gershowitz, Principal at DG Associates

"One of the great discoveries that I have made for my business is the Flevy library of training materials.

As a Lean Transformation Expert, I am always making presentations to clients on a variety of topics: Training, Transformation, Total Productive Maintenance, Culture, Coaching, Tools, Leadership Behavior, etc. Flevy

... [read more]

– Ed Kemmerling, Senior Lean Transformation Expert at PMG

"FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The

... [read more]

– Roderick Cameron, Founding Partner at SGFE Ltd

"I am extremely grateful for the proactiveness and eagerness to help and I would gladly recommend the Flevy team if you are looking for data and toolkits to help you work through business solutions."

– Trevor Booth, Partner, Fast Forward Consulting

"I have used FlevyPro for several business applications. It is a great complement to working with expensive consultants. The quality and effectiveness of the tools are of the highest standards."

– Moritz Bernhoerster, Global Sourcing Director at Fortune 500

"As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value."

– David Coloma, Consulting Area Manager at Cynertia Consulting