Value-based management refers to:
A) a framework for applying EVA to all business decisions.
B) a framework for making key business decisions that add economic value to the business.
C) a philosophy that management should focus on creating customer value.
D) a valuation technique that uses discounted cash flows to estimate imputed cost of capital.

Question

Quizplus · Accepted Answer

Value-based management involves making decisions that add economic value to the business. This may involve using various financial metrics such as economic value added (EVA), but the ultimate goal is to increase the overall value of the business. While creating customer value is an important aspect of business, it is not the sole focus of value-based management. Discounted cash flow analysis is a valuation technique that may be used to inform value-based management decisions, but it is not the same as value-based management itself.

Value-Based Management Refers To