FINANCIAL

PERFORMANCE
MEASURES
By Ralph Allen M. Garcia

EVALUATION OF PAST
FINANCIAL PERFORMANCE
Driver

Calculation

Relation to value Creation

ROIC

NOPLAT/invested
capital

A business org . Creates

value for its shareholders
only when it earns an ROIC
over and above it s cost of
capital.

FCF

NOPLAT/net
investment

ROIC and the proportion of

its profits that the business
invest for growth dive FCF
which in turn drives value.

Economic Profit

Invested capital X
(ROIC WACC)

Combines size and spread

(ROIC and WACC) into a peso
estimate of value added.

RETURN ON INVESTED
CAPITAL(ROIC) TREE

FINANCIAL PERFORMANCE
MEASURES

FCF
EVA

Profit Zone
Stock Price
Sale to Break Even