The Wealth Flow is part of an ABC type approach, and should suggest the wealth either generated (by income recognized in accounting, or not) or consumed (by recognized expenses or not). From the investor’s point of view this should be the next stage of analyze after the cash flow analyze, showing his net benefits generated by an investment. In a final stage the wealth flow should be a sum of shares value growth and dividends, however as the market is not always responding immediately and directly as it should, this should be seen as a potential growth expected from the investment, and the difference between the calculated stock value and the market value should be seen as growth potential (either positive or negative). In this paper we reveal the contents of the notion and we also present a case study.
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Article provided by University of Craiova, Faculty of Economics and Business Administration in its journal Annals of Computational Economics.