Module 8 presented two situations that could appear contradictory.

In calculating the enterprise value as the multiplication of Free Cash Flow by a factor (1 + g) / (CMPC – g), the approach suggested a positive impact of growth on value creation.

On the other hand, at the end of the module, we calculated the creation of value from the financial profitability, which would tend to privilege the latter.

Remember: the second module dedicated to the “financial issues” of the manager (“transversal” module) concluded that performance was the only source of value creation.

The objective of this ninth module is to present the complete approach of the relationship between profitability, growth and value creation: it shows the impact of growth on the consumption of financial resources and recalls that it plays a multiplying role of performance, but does not substitute for the latter in the process of creating value.

Exercise related to the video

Once you’ve watched the video, you can do an exercise to practice what you’ve just learned and assess your understanding of profitability, growth and value creation.