Comparative analysis of approaches to the assessment of the food-retail company Lenta ltd
Student: Biryukova Dar`ya
Supervisor: Varvara Nazarova
Faculty: Faculty of Economics
Educational Programme: Bachelor
Final Grade: 8
Year of Graduation: 2014
<p>The theme of the Graduate work is: “Comparative analysis of approaches to the assessment of the food-retail company Lenta ltd.” The work contains 24 figures, 18 tables and appendix. It is 94 pages in total. 34 sources were used for the work writing. Keywords: Value-Based Management, Economic value added, Cash value added, Shareholders value added, Cash flow return on investment, food-retail Company.</p><p>In recent years, there has been an increasing interest in Value-based (VB) financial performance measures as a new measurement approach which improved over traditional method. It based on an unequivocal and exact metric – value – whereon an entire organization can be built. Value Creation has become a major issue for enterprise management. Value Based Management (VBM) covers all levels of company so as to improve a process of decision-making and to make the best solution. There are some approaches belong to the VBM. All this approaches are also different in estimation. This project is undertaken to define the optimums method for the food-retail company because it is <strong>urgent</strong> now.</p><p>The <strong>purpose</strong> of the final qualifying work - to determine the most applicable to the sphere of the food retail VBM approach, based on the analysis of the results, obtained by the calculation of the value of the company "Lenta" with the considered methods. The <strong>object</strong> is assessment the value of the company "Lenta" by the methods of Value-Based Management, and the <strong>subject</strong> is a food-retail company “Lenta”.</p><p> In recent years, there has been an increasing amount of literature on a concept of VBM, but in Russian literature this topic is studied insufficiently. There are a limited number of empirical studies in the field of application of VBM to the food-retail company. <strong>Scientific novelty</strong> consists in the use of the three most popular methods of Value- Based management to actively developing food-retail Company. <strong>Practical significance</strong> of the work lies in the fact that the main conclusions and recommendations contained in the final qualifying work can be used by management companies when deciding on cost Management Company.</p><p><strong>In the first chapter</strong>, "Cost effectiveness methods for estimating the value of a company" the basic methods of VBM-approach are considered, such as economic value added, cash value added, shareholders value added, cash flow return on investment. Also there is a comparative analysis of methods, based on different criteria.</p><p><strong>In the second chapter </strong>"Position of “Lenta ltd” in the food retail industry," shows the period of development the food retail industry in Russia, describes the activities of the retail company “Lenta” and determined its location in the industry. To learn more about the company conducted a financial analysis based on data from the balance sheet and profit and loss account for the period 2011-2013.</p><p><strong>In the third chapter</strong> of "Practical calculation modern performance indicators: EVA, CVA, SVA on the example of food-retail company “Lenta” provides estimates of the value of the company based on the above methods. The results are compared. Also in this chapter the results are compared with similar calculations for other leading retailers in Russia.</p><p>On the basis of the company "Lenta" was calculated EVA indicator for the period 2009-2013, which reached its highest value in 2012 - 8,554,910 rubles. For the calculation of EVA has been used a number of adjustments, described in detail in the work. The cost of equity capital was estimated using a modified model of CAPM, which takes into account the risks associated with the small size of the company, also other risks of investing in the companies were under consideration. During the same period the index CVA was also calculated, and maximum value was reached in 2013 and amounted to 4,318,238 rubles. For the calculating is also used a number of adjustments. Another indicator was SVA, whose values are cyclically changed from positive to negative. Index reached its peak in 2012.</p><p>As a result of these calculations revealed that the shareholders value added is the most sensitive to external and internal political changes, macroeconomic changes. Cash value added reflects the general trend of the company. In our case, the company is actively developing and there is a steady growth in revenue and retained earnings, so the trend CVA is upward. Economic value added reflects the expansion of food-retail Company, but also takes into account that the growth rate of retail space grew faster than revenue growth. Thus, we can conclude that the choice of indicators should be based on goals set out by the leadership of the company.</p>
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