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Wealth Creation Print
Topic Contents
Wealth Creation
Looking at the Measures
Inventory Swings
Market Capitalization

Wealth Creation evaluates your ability to create wealth during your tenure as Management. It examines three measures:

  • Cumulative Profits, the sum of all company profits;
  • Cumulative Free Cash Flow, the sum of all of the Free Cash Flows since you took over management of the company;
  • Market Capitalization, the current value of your stock price times shares outstanding.

Each measure is worth up to 33 1/3 points. Since we are looking at accumulated wealth, the targets increase each year:

 
Cumulative Profits ($M)
Cumulative Free Cash Flow ($M)
Market Capitalization ($M)
Year 1
$6
$7
$60
Year 2
$14
$10
$66
Year 3
$24
$15
$78
Year 4
$36
$22
$88
Year 5
$52
$31
$110
Year 6
$73
$42
$140
Year 7
$100
$55
$180
Year 8
$135
$70
$234

If you do not reach the target, you can still earn points. For example, if your Year 4 Cumulative Profits is $18 million, it would earn

$18/$36 * 33 1/3 points = 16.65 points