METRICS MATTER
• Top management rule: 'You manage what you measure';
• These metrics have dominated decision making and resource allocation for decades.
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GDP GROWTH
• GDP growth makes improvement in corporate profits much easier;
• GDP growth has been indentified as an unsatisfactory metric for decades!
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CORPORATE PROFITS
• Management is usually clear about its top objective ... to improve profit performance;
• Owners are pleased with increased reported profit, because it gets reflected in stock prices;
• In turn this increases the wealth of owners!
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CAPITAL MARKETS
• With more GDP growth and more corporate profit growth there are higher stock prices;
• For owners, this is good news because with growing stock prices, they have more wealth.
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