The future value today


Imagine that you are the CEO of the company, which has just produced a report with different annual rates of growth in sales and profits. In annual address you assure shareholders that the company, as ever, has good growth prospects and increase the value.
In this case, you remember that the market value of the company over the last year has decreased by 5%, while the share price of the competitor grew by 10%. Worst-case scenario could be repeated in the current year: gross and net profit rising again, and the share price remains in place, while the stock price competition takes off.
What's going on? In general, the problem lies in the fact that the increase in the current financial performance, which contributes to the current value of the company can be significantly offset by negative if investors do not believe in the future of the company. In order to avoid this, management must have the big picture, which includes two components forming the cost: current and future cost   ....


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