On Decomposing Net Final Values: Eva, Sva and Shadow Project
A decomposition model of Net Final Values (NFV), named Systemic Value Added (SVA), is proposed for decision-making purposes, based on a systemic approach introduced in Magni [Magni, C. A. (2003), Bulletin of Economic Research 55(2), 149â€“176; Magni, C. A. (2004) Economic Modelling 21, 595â€“617]. The model translates the notion of excess profit giving formal expression to a counterfactual alternative available to the decision maker. Relations with other decomposition models are studied, among which Stewartâ€™s [Stewart, G.B. (1991), The Quest for Value: The EVAâ„¢ Management Guide, Harper Collins, Publishers Inc]. The index here introduced differs from Stewartâ€™s Economic Value Added (EVA) in that it rests on a different interpretation of the notion of excess profit and is formally connected with the EVA model by means of a shadow project. The SVA is formally and conceptually threefold, in that it is economic, financial, accounting-flavoured. Some results are offered, providing sufficient and necessary conditions for decomposing NFV. Relations between a projectâ€™s SVA and its shadow projectâ€™s EVA are shown, all results of Pressacco and Stucchi [Pressacco, F. and Stucchi, P. (1997), Rivista di Matematica per le Scienze Economiche e Sociali 20, 165â€“185] are proved by making use of the systemic approach and the shadow counterparts of those results are also shown. Copyright Springer 2005
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Carlo Alberto Magni, 2009.
"Modeling excess profit,"
PROYECCIONES FINANCIERAS Y VALORACION
005522, MASTER CONSULTORES.
- Magni, Carlo Alberto, 2000. "Decomposition of a Certain Cash Flow Stream: Differential Systemic Value and Net Final Value," MPRA Paper 7308, University Library of Munich, Germany.
When requesting a correction, please mention this item's handle: RePEc:kap:theord:v:59:y:2005:i:1:p:51-95. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.