Okay, let's think about shareholder value creation, and specifically the relationship between return on invested capital, weighted average cost of capital and growth, and how those three elements inform valuation.

Let's take the invested capital in the business and multiply it by the return on that invested capital.

We come to an EBIT of 240.

Now, unfortunately, some of that EBIT is gonna be required to grow the company to reinvest.

If I've got an invested capital of 2000, a growth rate of 4%, then we are going to need 80 to grow the business.

What does that leave us with? Well, we've got 160 available to investors.

So if we think about that 160 as a perpetuity, let's calculate the valuation for the business.

So if we take 160 available to investors and divide it by WAC minus G, we come two 3,200.

So what you can see there is that the valuation depends on return on invested capital, weighted average cost of capital and growth.

Let's think about how we might optimize return on invested capital through an investment decision.

Well, if we enter new markets, then we can grow the company or new products.

We can promote growth in the company and hopefully those happen at, at, uh, attractive margins. So that can help us to improve our return.

We can maybe look to make acquisitions of new companies, and again, that moves us into maybe new markets geographically or new product areas, and helps us to grow the business.

We can also think about divesting parts of the business, which maybe have particularly low growth or particularly unattractive margins.

Now let's compare that to weighted average cost of capital.

This is the financing decision. How can we optimize it? Well by looking at capital structure, so the proportion of debt versus equity.

We could look specifically at the cost of equity and the cost of debt.

And if we wanted to create value for shareholders, we need to try and ensure that return on invested capital is greater than weighted average cost of capital.