measuring business performance using value-based metrics and indices

The Value-Based Approach

Why destroy value when you can create it?

Many businesses will quietly destroy capital (and thus value) without owners or shareholders realising it until it is too late. Why? The performance of the organisation is more often than not judged by earnings-based metrics rather than one that factors in all costs including capital costs. Whilst Enron focussed on and promoted growth via the earnings per share measure, the company’s underlying capital and value destruction sealed its fate. This situation persists in business to this day with Carillion’s recent demise serving as a good example. Our role is to help owners and investors understand business performance by tracking the rate of value creation/destruction over time - also known as Economic Performance. We use value-based measures such as Economic Profit along with our own proprietary calculations and indexing methods to deliver a comprehensive perspective of where the business value engines are located and how to manage them in the future whilst identifying the areas within the business that are destroying value.

  • Our 3-step approach
  • 1. A Financial and Economic Analysis

    We undertake a thorough economic analysis to determine the true wealth/value dynamic at company and market-level.

  • 2. Assessment of business performance

    We identify the areas of the business that are creating value and those which are destroying value. We determine the reasons for good and not so good economic performance eg assessing the cost of revenue against the economic return, identifying the effect of disposals and acquisitions on the value creation dynamic and measuring the economic efficiency of the business using our proprietary indexing capabilities.

  • 3. Moving to a value-based strategic approach

    We assist and advise in the reshaping of corporate strategy to focus on value-creation.

Value-based metrics in action

Going beyond the Pre-Tax Profit level provides increased transparency in terms of overall business performance. With our unique analytical capabilities we are able to uncover trends previously hidden by the use and reliance on earnings-based measures. Therefore, we can get further into the financial mechanics of the business and understand exactly what is happening and why. Click on an image to see it in context.

Follow vysyble on Twitter

#EuropeanSuperLeague makes complete sense given the generally poor economic profit profiles of leading clubs. This should not come as a surprise given our own work in this area over the last 2-3 years.

Guardian sport@guardian_sport

Manchester City and PSG should be thrown out of Europe, says La Liga president @seaningle

Interesting comment and debate here - when we stated this almost two years ago we were accused of “scaremongering” - keen to see if the same sentiment is forthcoming from that individual

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vysyble has gained extensive international media coverage from highlighting the value dynamics and economic performance of high-profile sectors such as English Premier League football, the UK energy supply market and the UK supermarket sector.

Getting a measure of true business performance starts here...

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