The Value Driver Tree
About a century ago, Du Pont created a metric concept called the value driver tree, which splits Value Based metrics such as EVA and ROI into their sub-metrics to show the source of the value added. Value drivers include measures of growth, margins, capital efficiency, and leverage.
The original value driver tree for non-financial institutions is based on the assumption that financing is not part of operating the business. If financing is part of business operations, as in banks and insurance companies, the value driver tree for financial institutions is used.
Click here for the Financials Value Driver Tree.
Click here for Value Driver Tree metric definitions.
Click here for value based executive compensation.