The Value Of A Company And The Creation Of Value In That Company

The value of a company and the creation of value in that company

In the essay written by Julio Bonmati Martínez, VP of AECE Madrid, it is about contextualizing that it is the value of a company and the creation of value is, what is the difference between one and the other and finally defining the importance or relevance they haveInside the company.

Julio defines the value of the company, as the set of elements, material or intangible and human that integrate or constitute a company, highlighting that calculating this value is not an easy task, since there is no perfect formula that defines it, however, it tells us that taking into account certain indicators such as the accounting value, the substantial value, liquidation value, performance value, trade fund or stock value, we could find or set the value of a company, since through these indicators, duly dulycompleted, the true value of the company can be formulated.

For the creation of value, Julio begins by saying, that this value creation must be the priority of every company, but generates a very interesting question, and it is that of how the value is measured?, In its writing proposes a simple solution to say, but complicated to apply, and that, if the benefit obtained by a company is higher than the cost of production, we can conclude that value has been created.

Finally, reference is made to a theoretical model defined by Michael Porter, in which he tells us that if the creation of value is maximized while minimizing the costs we use what is known as value chain, therefore, by identifying or achieving aValue chain, we can also achieve a competitive advantage, I understand the competitive advantage as a margin between income and costs higher than those of the rivals.

In conclusion, if a company generates a significant value creation, and manages to increase that value creation, by increasing said income while decreasing production costs, we can say that the company has a high profitability, which isIt translates into a company with high value or a higher value compared to its direct rivals, taking into account the value creation and value chain parameters mentioned above.