Economic Value and Intrinsic Value

We need to differentiate between monetary wealth and the value it is creating, which takes account of the way we establish value not only for shareholders but for all stakeholders in an economic enterprise. Economic value, which is a component of the intrinsic value of a business, is one of the first metrics for value investing and value-based management, and for validating the target share prices which investment analysts recommend. The chapter looks at the various dimensions of value, and poses some questions which businesses, professional advisors, and regulators need to answer and agree, if economic value reporting is to become a basic metric for measuring the creation of corporate value, the future sustainability of a business, and how people are paid for creating economic value.