Research On Evaluation Of Financial Performance Based On EVA

Enterprise operation performance measurement plays a very important part in an enterprise's inner management system, the effectiveness of which has direct influence on the ompetitiveness in present-day business competition. In recent years, with further development of security market and establishment of modern enterprise system in China , the theory and practice of enterprise operation performance measurement have been developed greatly in China ,and then more and more scholars have engaged in the research of this area, especially non-financial performance measurement and strategic performance measurement attract more people's attention today and so have become heated issues in theory. However, this trend cannot weaken the financial performance measurement's importance in an enterprise's inner management system. Whether a shareholder or a leader of a company will not invest their capital in an enterprise which cannot bring back satisfactory financial result, noneffective financial performance measurement will surely destroy value of your firm. Core financial performance index reflects the ultimate goal of an business and measure a enterprise's comprehensive financial result ,and to select what kind of financial index is so important that it can have a direct impact on the function the whole performance measurement system. Difficulties in the operation of many listed companies in our country especially state-owned corporations have much relation to their incorrect selection of core financial performance index. Every corporation in economy selects its core financial performance index and put it into effect, but until now, no scholar has ever put forward his opinion on how to select core financial performance measurement index. So this paper is aimed to answer the question about how to select core financial performance index and to select what kind of financial index is so important that it can have a direct impact on the function the whole performance measurement system. Difficulties in the operation of many listed companies in our country especially state-owned corporations have much relation to their incorrect selection of core financial performance index. Every enterprise in economy selects its core financial performance index and put it into use, but until now, no scholar has ever put forward his opinion on how to select core financial performance measurement index. So this paper is aimed to answer the question about how to select core financial performance and to select what kind of financial index as its core financial index.Firstly, in chapter one, the author divides the whole evolving process of financial performance measurement into four phases: cost-oriented performance measurement period, profit-oriented performance measurement period, comprehensive-investment-effectiveness-oriented performance measurement period and value-oriented performance measurement period. Through the review of the evolving process, we can come to the conclusion that, whatever period an enterprise is in, it needs proper core financial index which is suitable to its management characteristics; as its operation circumstances change, core financial index should be properly changed .And how to correctly select the core financial index which is suitable to management needs in the 21st century's new economy period? And then in chapter two, the author establishes eight fundamental principles in regard to selection of the core financial index: 1. a core financial index should has a positive relevance to the enterprise 'goal of value creation;2.a core financial index should satisfy interest needs of all the sides engaged in the contract of the firm ;3. a core financial index should be able to reflects an enterprise's persisting operation power;4.a core financial index should be able to reflects the power of risk resistance;5.a core financial index should make the capital budgeting consistent with the afterwards capital project operation performance measurement ;6.a core financial index should keep the enterprise's organization s...