876  Index
Share repurchases, 44–46, 233, 633, 
635, 654–659
EPS growth, 111
Shiller, Robert, 99
Short-termism, 6–9
Siemens, 217, 616–617, 625, 628
Simplified intermediate forecast, 260
Single-path DCF, 761
Social responsibility, 11–12
Sodexo, 12, 248–249, 251
Solvency, 820–821
Spin-offs, 626, 627–628
Split-offs, 626, 627
Stability bias, 576
Stafford, Erik, 589–590
Stakeholder interests, 11–14
Statement on the Purpose of a 
Corporation (Business 
Roundtable), 4, 12, 85
Staunton, Mike, 311, 312, 832
Stochastic simulation DCF, 761
Stock market, 99–126
bubbles, 103 (see also Financial crises)
cross-listings, 121–122
diversification, 118–119
earnings (see Earnings per share (EPS))
fundamentals of, 100–109
index membership impact on 
company, 120–121
informed investors vs. noise 
investors, 100–101
market mechanics, 120
relationship of company size to 
value, 119–120
stock splits, 123–124
total returns to shareholders (see 
Total shareholder returns (TSR))
understanding expectations, 80–81
Stock splits, 123–124
Stranded costs, 623–624
Strategic health, 558
Strategic management
analytics, 547­–569
adopting granular perspective, 
548–550
monitoring results, 567–569
Risk:
cash flow risk, 63–66
diversifiable vs. nondiversifiable, 
774–777
exposure level, 63–66
hedging, 66–67
price of, 57–59
Risk-free rate, 312–314, 700
Risk-neutral valuation, 771–772
Risk-weighted assets (RWA), 753–755
Robotic process automation (RBA), 
91, 94
Rockwell Automation, 35
ROIC. See Return on invested capital 
(ROIC)
Roll-up strategies, 597–598
RONIC (return on new invested 
capital), 288, 289, 294, 298
Rossi, Stefano, 590
RSC, 46
Ruback, Richard, 199
Ryanair, 131
Sale-leaseback transactions, 48–49, 237
Sales productivity, 556
Sanofi Aventis, 536
Scalability of products/processes, 
137–138
Scenario analysis, 60–61, 357, 362–366
Scenario DCF approach, 692–698, 
709–710, 761
Scenario development, 719–720
Scenario weighting, 720
Scholes, Myron, 203
Securities and Exchange Commission, 
69
Securitized receivables, 443
Sell-side analysts, 675
Sensitivity analysis, 357, 360–362
Service Corporation International, 
597–598
Shareholder capitalism, 3, 9–11
Shareholder payouts, 651–658
Shareholder returns. See Total 
shareholder returns (TSR)
Shareholder value creation, 5–6

Index  877
earnings guidance and, 682
enhanced approach to analyzing, 77
expectations treadmill, 70–73
impact of debt financing on, 79
key drivers of, 76
managerial implications, 81–82
as measure of management 
performance, 77–80
and spin-offs, 628
traditional approach to analyzing, 
74–77
traditional vs. enhanced 
decomposition, 77
Tracking stock, 626, 630–631
Traders, 671, 672–673
Trade sales, 626
Transformational mergers, 598–599
Transparency, 676, 677–680
Triangulation, 703–707
TSR. See Total shareholder returns 
Tyco, 617, 618
Tyson Foods, 72–74, 79–80, 81
Uncertainty. See Flexibility
Unilever, 87, 120, 129, 391, 513, 654
Unique resources, 136
United Parcel Service (UPS), 119, 120, 
137, 214, 219, 224, 269, 382, 556
United Rentals, 46
Unlevered cost of equity, 805–807
Valero Energy, 536
Valuation by parts, 391–409
corporate overhead costs, 397–398
cost of capital, 404–406
enterprise to equity value buildup, 
394–395
estimating invested capital, 403–404
estimating NOPAT, 402–404
financial subsidiaries, 401–402
individual unit financial statements, 
396–404
intercompany receivables and 
payables, 400–401
intercompany sales and profits, 
398–400
setting targets, 566–567
simpler alternative, 551–554
taking enterprise view, 550–551
three processes, 548
value drivers, 554–559, 569
value driver trees, 560–566, 569
mindsets, behaviors, and processes, 
548, 571–584
debiased decision making, 576–580
spending to maximize value, 571
strong governance, 573–576
synchronized processes, 580–584
three elements, 572–573
Strategic vision, 611
Strategy, streamlined process in, 581
Subsidiaries, 190–191
Synchronized processes, 573, 580–584
Tapestry, 241
Target-setting, 566–567
Target weights, 328–331
Taxes, 413–426
deferred, 219–220, 423–425
forecasting, 272–273
operating, 413–423 (see also 
Operating taxes)
provisions and, 441
Tax loss carryforwards, 218, 343–344
Tax-loss carryforwards, 424–425
Tax on a maturity mismatch (TMM), 746
Tax penalty on equity, 745
Tax shields, valuing, 198–199
Technology bubble, 102, 103, 108–109, 
316, 317
Thaler, Richard, 99
Top-down forecasting, 265–267
Total debt, 271
Total funds invested 
computing, 216–218
reconciling, 218–221
Total shareholder return (TSR), 6, 
69–82
correlation with employment 
growth, 14
decomposing, 74–80
defined, 69
diversification and, 539