Business, Legal & Accounting Glossary
Any variable that significantly affects the value of an organisation.
A value driver is any variable that significantly impacts the value of an organisation.
Alfred Rappaport identified seven key drivers of value in his development of shareholder value analysis.
These key drivers are:
Of the seven key drivers identified by Rappaport, the first 5 (sales growth rate, operating profit margin, tax rate, fixed capital investment, working capital investment) may be used to forecast the future cash flows of a business, whereas the planning period and cost of capital can be used to calculate the present value of these cash flows.
For example: Sony produces high-quality products for which consumers are prepared to pay a relatively high price.
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This glossary post was last updated: 5th May, 2019