evaPPT
IntroductionEVA is an important performance measurement tool in modern enterp...
IntroductionEVA is an important performance measurement tool in modern enterprise management, which reflects the value added by enterprises better than traditional accounting indicators such as profits, sales revenue, etc. It was founded by Stewart Spence and Co. in 1982, and has been widely used in more than 30 countries and regions around the world. EVA is a comprehensive index reflecting the value added created by the enterprise based on the amount of capital applied, and it can reflect the real economic performance of enterprises better. The core idea of EVA is to measure the value added of enterprises from the perspective of capital efficiency, which is to calculate the enterprise value by subtracting the cost of capital from the profit generated by capital.Calculation Method of EVAEVA is calculated by the following formula:EVA = NOPAT - (Capital Employed × WACC)Where NOPAT is the operating profit after deducting the cost of financial capital, which is obtained by amortizing the initial investment of financial capital and subtracting the amortization of financial capital interest; Capital Employed is the total economic cost of all capital applied in the enterprise, including debt capital, equity capital and operating lease liability; WACC is the weighted average cost of capital, which represents the average opportunity cost of capital provider, which is used to evaluate whether the enterprise can obtain sufficient compensation for the risk of capital investment.In practice, EVA needs to be calculated on the basis of annual financial statements, which should be adjusted for relevant items in accordance with the actual situation of enterprises to eliminate accounting distortions and ensure that the calculation results are in line with the actual economic performance of enterprises.
