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Date: 2024-12-14 Page is: DBtxt003.php L0900-TVM-economic-metrics-01a
TVM Principles of Management
The Dominant Economic Metrics
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THESE METRICS DOMINATE DECISION MAKING
GDP GROWTH CORPORATE PROFITS CAPITAL MARKETS
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METRICS MATTER
 •   Top management rule: 'You manage what you measure';
 •   These metrics have dominated decision making and resource allocation for decades.

GDP GROWTH
 •   GDP growth makes improvement in corporate profits much easier;
 •   GDP growth has been indentified as an unsatisfactory metric for decades!

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!

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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