《公司财务案例与理论（十）》中学生教育文学丛书.pdfVIP

Introduction to Economic Value Added September 1999, Esa Mäkeläinen, M. Sc. (Econ) Contents 1. Background, use, benefits 2. Basic premise 3. Definition and characters 4. EVA and market values 5. EVA and bonus systems 6. Implementation 1 esa.makelainen@ History and background • Old consept (Residual Income = Operating profit - capital costs) – However: the development level of capita markets, estimation of cc, Shareholder Value -approach. were not supporting it those days • In the late 1980´s Stern Stewart Co (U.S.) – name and trademark EVATM (Economic Value Added) – presented the superior characters in perform. measurement, link to market values (the bigger EVA, the bigger m-cap), bonus systems – presented some very successful EVA management and bonus systems (e.g. (Coca- Cola, WalMart, Briggs Stratton, ATT) – During 90´s to almost every big US-company (most used measure) What EVA has had to give in order to expand like this? • Superior performance measure compared to e.g. operating profit, profit after fin. items, EPS, ROI, ROE… (explained later in detail why) • Still very simple and operatively practical • Improves profitability normally first through improved capital turnover • Very suitable for bonus systems (logically after the first point) 2 esa.makelainen@ The basis of EVA: The average return on stock market •