Shareholder Value

Calculate economic value added and shareholder return. Use for investment analysis, valuation, and capital allocation decisions.

Security Scan

The skill is an instruction-only financial analysis template that requests no credentials, binaries, or installs and its runtime instructions are consistent with its stated purpose.

Purpose & Capability

Name, description, and SKILL.md all describe SVA/economic-profit analysis and the instructions only require financial inputs and calculations. There are no unrelated environment variables, binaries, or config paths requested.

Instruction Scope

The SKILL.md stays within its stated purpose (defining formulas, data-gathering steps, and output formats). It does not instruct the agent to read system files, export data externally, or access credentials. Note: a couple of formula presentations appear inconsistent with common finance conventions (e.g., 'Economic Profit = NOPAT + Cost of Capital (WACC × Capital)' usually should be NOPAT minus the capital charge). This is a correctness/accuracy issue rather than a security concern.

Install Mechanism

No install spec or code files are present. This is the lowest-risk model (instruction-only); nothing will be written to disk or fetched at install time.

Credentials

The skill declares no required environment variables, credentials, or config paths. There is no disproportionate credential request.

Persistence & Privilege

The skill does not request always:true and is user-invocable only. Autonomous model invocation is allowed by default but is not combined with elevated privileges or persistent configuration changes.

Assessment

This skill is an instruction-only template for SVA and economic-profit analysis and does not request any credentials or install anything. It's safe from a permissions/installation perspective. Before using it: (1) provide accurate financial inputs yourself — the skill assumes you supply statements and market values; (2) double-check formula signs and definitions (especially the economic profit / capital charge formulation and any WACC assumptions); (3) test with known examples to ensure the calculations match your expected methodology; and (4) remember market-value components are inherently speculative, so validate assumptions and perform sensitivity analysis. If you need automatic data fetching, expect to add connectors that will require credentials — review those separately when added.

Shareholder Value Analysis

Metadata

• Name: shareholder-value
• Description: Shareholder Value Added (SVA) and economic profit analysis
• Triggers: shareholder value, SVA, economic profit, valuation, capital allocation

Instructions

Analyze how business decisions create or destroy shareholder value.

Framework

The SVA Identity

SVA = NOPAT + Change in Working Capital - CapEx + Market Value Change

Where:
- NOPAT = Net Operating Profit After Tax
- Change in Working Capital = (Ending WC - Beginning WC)
- CapEx = Capital Expenditure
- Market Value Change = (Ending MV - Beginning MV)

SVA Components

Component	Formula	Definition
NOPAT	EBIT × (1 - Tax Rate)	Profit after tax, available to all stakeholders
WC Change	ΔWorking Capital	Investment/recovery from operations
CapEx	New Fixed Assets - Disposals	Investment in growth or efficiency
MV Change	ΔMarket Value	Change in intrinsic business value
Economic Profit	NOPAT + Cost of Capital (WACC × Capital)	True economic profit created

Output Process

1. Define scope - Business unit or entire company
2. Gather data - Financial statements, market valuations
3. Calculate NOPAT - EBIT, taxes, interest
4. Calculate components - WC change, CapEx, MV change
5. Compute SVA | Apply SVA identity
6. Analyze economic profit - Calculate cost of capital
7. Assess value creation - Positive vs negative SVA
8. Recommend strategy - Value-creating or value-destroying

Output Format

## Shareholder Value Analysis: [Subject]

### Executive Summary

| Metric | Value | Assessment |
|--------|-------|------------|-------------|
| **NOPAT** | $X M | ✅ Profitable base |
| **Economic Profit** | $Y M | ✅ Value created |
| **SVA** | $Z M | ⬆️ Value added | ⬇️ Value destroyed |
| **ROI** | X% | ✅ Above cost of capital |

---

### SVA Calculation

| Year | NOPAT | WC Change | CapEx | MV Change | SVA |
|------|------|----------|--------|----------|--------|
| 2024 | $X M | -$Y M | $Z M | $W M | $A M |
| 2025 | $X M | +$Y M | $Z M | $W M | $B M |
| 2026 | $X M | +$Y M | $Z M | $W M | $C M |
| 2027 | $X M | +$Y M | $Z M | $W M | $D M |
| **Total** | $X M | $Y M | $Z M | $W M | $Σ SVA |

---

### Value Creation Analysis

**Value Created (Σ Positive SVA)**
- Years: [Which years added value]
- Cumulative: $X M
- Drivers: [What created value?]

**Value Destroyed (Σ Negative SVA)**
- Years: [Which years destroyed value]
- Cumulative: $Y M
- Drivers: [What destroyed value?]

### Economic Profit Analysis

| Year | NOPAT | Capital Employed | Cost of Capital (10%) | Economic Profit |
|------|--------|----------------|-----------------------------|----------|
| 2024 | $X M | $Y M | $Z M | $A M |
| 2025 | $X M | $Y M | $Z M | $B M |
| 2026 | $X M | $Y M | $Z M | $C M |
| 2027 | $X M | $Y M | $Z M | $D M |
| **Total** | $X M | $Y M | $Z M | $Σ SVA |

---

### Investment Evaluation

| Project | SVA | NPV | IRR | Payback | Decision |
|---------|------|---------|---------|------------|
| [Project A] | $X M | $Y M | Z% | X years | [Approve/Hold/Reject] |
| [Project B] | $Y M | $W M | Y% | X years | [Approve/Hold/Reconsider] |
| [Project C] | $Z M | $V M | W% | X years | [Approve/Hold/Reconsider] |

### Strategic Implications

**Value-Creating Strategy:**
1. [Implication 1] - [Analysis]
2. [Implication 2] - [Analysis]

**Value-Destroying Strategy:**
1. [Implication 1] - [Analysis]
2. [Implication 2] - [Analysis]

**Capital Allocation Strategy:**
1. [Strategy 1] - [Analysis]
2. [Strategy 2] - [Analysis]

Tips

• SVA focuses on cash flow, not accounting
• Market value changes are speculative - be cautious
• Economic profit reveals true value creation
• Compare cost of capital across projects
• Consider WACC carefully - affects all valuations
• Multi-year analysis smooths volatility
• Terminal value assumptions have huge impact - test scenarios

References

• Rappaport, Alfred. Creating Shareholder Value. 1998.
• Copeland, Thomas & Weston, J. Fred. Financial Theory and Corporate Policy. 1988.