CPE Self-Study

Strategic Performance Measures

Publisher: AICPA
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In the current economic climate the reliance on the markets to determine the true worth of an organisation, through the metric of Market Value Added (MVA) has been challenged. More organisations have argued that the true worth of an organisation is its ability to generate cash for investors. As such it is argued an organisation that wishes to maximise investor wealth should adopt the principles of Shareholder Value Analysis (SVA) and make managers accountable for the decisions that they make and the impact that this has on the value of the company. These are taken one step further when consideration is given to whether traditional management accounting concepts of cost encourage managers to make short term decisions. Economic Value Added (EVA) theory argues that certain costs should be viewed as investments and performance measured appropriately.

Learning Objectives:

  • Apply the use of Market Value Added (MVA) as a performance metric and its limitations
  • Describe why cash is king in the current environment and how the concept of Shareholder Value Analysis (SVA) can encourage managers to take decisions that truly enhance the value of a company
  • Determine whether traditional management accounting concepts of cost encourage managers to take the wrong decisions.
  • Differentiate between cost or investment and the principle of Economic Value Added EVA).

Prerequisites: None


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About the Publisher


About the AICPA The American Institute of CPAs is the world’s largest member association representing the accounting profession, with more than 412,000 members in 144 countries, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. The AICPA sets ethical standards for the profession and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination, and offers specialty credentials for CPAs who concentrate on personal financial planning; forensic accounting; business valuation; and information management and technology assurance. Through a joint venture with the Chartered Institute of Management Accountants, it has established the Chartered Global Management Accountant designation, which sets a new standard for global recognition of management accounting.

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