Accounting criteria of value creation (See Chapter 19 of the Vernimmen) These criteria, which appeared first in financial communication, include earnings per share, net income, ROE, CFROI, and ROCE. They in fact measure accounting profitability and not value creation. The problem of these indicators is that they can be easily manipulated, precisely because of their accounting nature. Accounting nature means not taking into account the risk of the company and/or its cost of equity. Only ROCE avoids this bias. This is the reason why ROCE has recently become the main measure of economic performance. Accounting criteria of value creation (See Chapter 19 of the Vernimmen) These criteria, which appeared first in financial communication, include earnings per share, net income, ROE, CFROI, and ROCE. They in fact measure accounting profitability and not value creation. The problem of these indicators is that they can be easily manipulated, precisely because of their accounting nature. Accounting nature means not taking into account the risk of the company and/or its cost of equity. Only ROCE avoids this bias. This is the reason why ROCE has recently become the main measure of economic performance. See all terms in the dictionary of finance To know more about it, look at what we have already written on this subject :

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Definitions of terms begining with the same letter as "Accounting criteria of value creation" :

ABS ADR ANAV APE APT APV Abandonment risk Accelerated book-building Accelerated depreciation Accelerated share repurchase Account balancing Accounting criteria of value creation Accounting currency risk Accounting procedures with an impact on earnings Accounts payable Accounts receivable Accretion Accruals Accrued expense Accrued income Acid test ratio Acquisitions Acquisitions Acquisitions Adjustable rate preference shares

Adjustable-rate debt security Adjusted Net Asset Value Adjusted present value, APV Administrative synergy Advance dividend Affirmative covenant Agency costs Agency theory Agent bank Agent fee Agreement in principle All-in cost All-share transaction Alliance Allocative efficiency Alpha Also called order book. Alternative management American Depositary Receipt American option Amortisation Amortisation of the loan Annual Premium Equivalent Annual effective interest rate Annuity

Annuity factor Apparent dilution Appraisal clause Arbitrage Arbitrage pricing theory, APT Arranger Arranging the deal Asset backed commercial paper Asset backed securities Asset beta Asset contribution Asset coverage Asset turnover Assets Associate Associated undertaking Asymmetry - option Asymmetry - shareholder / creditor Asymmetry – issuer/investor At the money Atypical silent partner Auction Auction clause Average life of a bond