- This topic has 3 replies, 2 voices, and was last updated 4 months ago by
.
- Posts
1) a) Please, what measures, are direct measures of shareholder wealth.
1) b) The measures in a) above , are they enough on their own as complete/adequate measures of shareholder wealth or are they best used with other measures to get a complete picture of shareholder wealth.
The most direct measure of shareholders wealth is the share price. Easy if the company is listed. If not listed then some sort of share valuation should be performed. The dividend valuation model would take into account estimates of future growth.
The P/E ratio method is based on historic eps, but that could be adjusted to try to account for potential value.
Risk is also important, but that would, to some extent, be accounted for in published P/E ratios (usually discounted when dealing with an unliddted company) and the discount rate for the dividend valuation model.
NRV of assets is relevant if the company is being broken up.
- You must be logged in to reply to this topic.