| The managers need to allocate resources effectively to maximize shareholders’ wealth. The wealth of shareholders is usually measured by traditional accounting indicators or financial statement ratios, and then managers, shareholders or other stakeholders will evaluate enterprise performance by the information of financial statements. But after American economic crisis from 1929 to 1933, accounting indicators based on financial statement can’t meet the need from capital market and shareholders any more. Under this circumstance, economic value added(EVA) emerged. EVA reflects real economic profit much more precisely than any other financial indicators and it is also the most relevant element to wealth creation among other evaluation indexes.Based on the comprehensive review of related research literature, this paper cards the history of China’s enterprise performance evaluation and analyzes the current situation of it. Firstly, taking 56 listed corporation of power industry in both Shanghai and Shenzhen Stock Market from 2010 to 2012 as an example, this paper examines the relationship between EVA and enterprise value in an empirical way. Through correlation analysis and stepwise linear regression analysis, we find that there is a strong positive correlation relationship between EVA and enterprise value, although it is not significant. Moreover, EVA index can not completely replace the traditional financial accounting indexes to measure the value of the enterprise; however it can help explain the fluctuation of the enterprise value. The combination of them can evaluate enterprise value more accurately, systematically and synthetically. Secondly, after discussing the shortcomings and defects of traditional decision-making methods, this paper discusses the methods and advantages of using EVA index in enterprise decision makings by comparative research method. In project investment decisions, taking capital cost into consideration can increase the accuracy of decisions. In financing decision, EVA can match the operating risk to the actual situation of enterprise, thus strengthens financial flexibility of enterprise. In cost decision of daily production management, EVA combines with activity based costing method to form an E-A method. In expense decision of daily production management, EVA can encourage managers to make decisions which will increase enterprise value. Finally, this paper takes NMG Electric Power Group in electric power industry as an example to study the practical application of EVA. This paper divides its subordinate departments into profit center and cost center, and it randomly takes one of each part as examples. Through factor analysis and sensitivity analysis, this paper finds out key driving factors and key damage factors that influence EVA of enterprise, and then constructs the platform of EVA information.The breakthrough of this paper is that it breaks the limitations in previous EVA researches. This paper firstly studies the correlation relationship between EVA and enterprise value of electric power industry, secondly studies the application of EVA in enterprise decision-making and finally studies the EVA application and the construction of EVA information platform in NMG electric power group in a comprehensive and in-depth way. This paper strongly suggests applying EVA index into evaluation system to add enterprise value by improving EVA level, and applying it into enterprise decision-making to make scientific and comprehensive enterprise decisions.
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