  Many still rightly wonder whether accounting numbers affect business value.
Basic questions are why? and how? I aim at promoting an objective choice on how
optimizing the most suitable valuation methods under a value-based management
framework through some performance measurement systems. First, I present a
comprehensive review of valuation methods. Three valuations methods, (i) Free
Cash Flow Valuation Model (FCFVM), (ii) Residual Earning Valuation Model (REVM)
and (iii) Abnormal Earning Growth Model (AEGM), are presented. I point out to
advantages and limitations. As applications, the proofs of the findings are
illustrated on three study cases: Marks & Spencer's business pattern (size and
growth prospect), which had a recently advertised valuation problem, and two
comparable companies, Tesco and Sainsbury's, all three chosen for
multiple-based valuation. For the purpose, two value drivers are chosen,
EnV/EBIT (entity value/earnings before interests and taxes) and the
corresponding EnV/Sales. Thus, the question whether accounting numbers through
models based on mathematical economics truly affect business value has an
answer: Maybe, yes.
