Striving for Excellent Performance
http://www.thejakartapost.com/news/2009/09/16/striving-excellent-performance.html
Totok Sugiharto , Contributor , Jakarta | Wed, 09/16/2009 2:20 PM | Supplement
The traditional accounting model of valuation argues that particular equity share prices are set when the stock exchange capitalizes a company’s earnings per share (EPS) at an appropriate price/earning (P/E) ratio.
The difficulty is that the P/E ratio of a company changes all the time and this makes the EPS and P/E methods very unreliable as measurement tools for value.
As a consequence, both of the traditional models of performance measurements are inadequate in the sense that neither of them addresses the main concern of shareholders: i.e. is the management adding or subtracting value from their invested capital?
