Research On Performance Evaluation System Of Enterprises

"The problem of enterprise performance evaluation is the central problem in any and every economic entity "(Chen Xiaoyue,1999).In a modern information society in which science and technology advance rapidly with each passing day, how are we to make our performance evaluations represent both long-term achievements and short-term achievements, both financial indications and non-financial indications, and both partial departmental achievements and the whole compositive achievements as well? How are we to establish for modern enterprises a complete performance evaluation system adapting to the needs of the market economy and modern enterprise system, fairly and objectively evaluating our enterprises' real performances, standardinging their operating activities of the enterprise as a whole?After a careful study of many treatises and monographys published at home and abroad on these problems in combination, with the practice of enterprise performance evaluation in our country, the author of this article focuses her analysis on the existing problems of our current enterprise performance evaluation system (2002). On the basis of the above-mentioned analysis and for the two purposes of expanding our conventional financial indication system and introducing non-financial indications into the evaluation system, the author suggests the following improvements in the current enterprise performance evaluation system:Firstly, in choosing financial indications, we must consider the reward for the cost of equity capital and include the Economic Value Added (EVA) indications, so that the truth of the enterprise's profits and its management performance can be brought to light. In order to remedy the defect arising from the rights and duties basis of our accounting system, such three cash flowindications as the ratio of sales to cash, cash interest coverage ratio and cash ratio of further investment should also be incorporated into the financial indications so as to represent the enterprise's profit quality in an all-round way.Secondly, in choosing non-financial indications, we should consider the reestablishment of a new non-financial indication system by reference to advanced foreign theories of the Balanced Scorecard (BSC) and Activity-based Costing (ABC). We should also classify in accordance with modern management theories all non-financial indications into three groups: indications representing the enterprise's management conditions, indications representing the quality and technology conditions of its products as well as indications representing its comprehensive social influence and its sustained power for follow-up development. The incorporation of these indications is to make our enterprises' performance evaluation system and the part of their qualitative evaluation more visually represented.Finally, to illustrate her points of view, the author of this article supplies as an instance the performance evaluation of a certain steel plant in order to theoretically verify her reestablished indications system.