The value of our current operations is the present value of operating profits (PV of NOI), plus the operating capital (OC) used to generate those profits.
We distinguish between operating capital (OC), used to generate operating profits (EPC or NOI), from strategic capital (SC), which may generate little or no profit, but may be reasonably expected to do so in the future.
To a certain extent, we can assign EPC and OC to particular areas of our business, e.g., by customer, or by class of shipment. Valid assignments give us a clearer idea of where our business is creating value.
However, most of our value creation comes from a combination of activities that cut across entire business units, such as our asset management system, or our customer service centers. These represent major strategic assets that enable us to achieve profitability.
© 2002 Hodak Value Advisors