Pentax 2012 Annual Report Download - page 23

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In 1997, HOYA changed its management
benchmark from return on equity (ROE) to
shareholder value added (SVA), which
takes into consideration the cost of
capital. ROE, an index that emphasizes
the effective use of capital, measures the
profit a company has made using the
capital that its shareholders have
entrusted to it. In contrast, SVA takes into
account the cost of capital, so it attaches
great importance to the corporate value. It
subtracts the cost of capital from the net
income generated by business activities,
yielding the added value that has actually
accrued to the corporate. Prior to 1997,
HOYA had already adopted a
management stance of “consider
shareholders first.” It then took this
principle one step further with the
adoption of the SVA index, as part of its
commitment to maximizing corporate
value.
SVA management
Corporate value-oriented management focused on the extent to which profit has exceeded the
cost of capital.
SVA management emphasizes the extent to which the profits a company generates
exceed the cost of assets, using the company's assets. When profits exceed the
cost of capital, corporate value increases. SVA management satisfies all of the
company's stakeholders first, and then increases corporate value.
SVA and MARKET VALUE
* MVA is the aggregate each year of single-year SVA discounted by the cost of capital at current value.