Economic profit, the total profits of a company after subtracting the cost of capital, is the key metric for shareholders. This is not the traditional way finance professions will look at firms, but it gets to the heart of the issue - focusing on the return to invested capital and revenue growth.
McKinsey researchers focused on over 2000 large firms to find the metrics that really matter for the total return to shareholders. It is all about revenue growth, growth in profits, and the firm's margin delta. Not growth at any cost but growth that can sustain a profit on invested capital and not on earnings per share which can be engineered without value creation. Their grid tells the relevant story. If you want to beat other investors you have to think about alternative metrics for shareholder value.
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