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A-I have reade examiner comments. In it is written for part (ii) “most candidate still fails to follow a logical approach to such a question by firstly considering what such reports aim to achieve and so relate the report to the achievement of the mission of the company being examined”.
Base on my text book and practising knowledge it is a way how we evaluate the performance report!. We link it to the mission and objective given, and in answer same approach had been followed i.e first two paragraph is relating the report to the mission. After then there is other points related to company.B-I want to know that share price and dividend per share are the direct measure of shareholder wealth like RI,EVA or not, if not please explain.
Thank You.
1 I don’t see what point you are making. The question asks you to evaluate the strategic performance report and that is what the answer does.
2 I don’t know what you mean by ‘direct measure’. Certainly discounting future dividends will give a measure of shareholder wealth based on the dividend valuation model. Given that theory says dividend timing is irrelevant the NPV of a company’s future earnings will affect share price too.
RI does no measure shareholder wealth directly: it measures how well a company uses investment and it this is below the required cost of capital then share value will fall.
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