EVA And Its Application In Enterprise's Valuation

Economic Value Added (EVA) is economic profit that is Net Operating Profit After Tax deducted Weighted Average Capital Cost (include equity and debt capital cost). EVA management evaluation system is a comprehensive management system based performance measurement, related to various stage and different function of value management. EVA data can provide common and definite target to each person in the corporation. It is EVA that could rationally express the business value influenced by the cost of capital, and could actually show the value increase through accounting adjustment, such as, capitalized research & developing cost, goodwill, depreciation, and so on. Consequently, EVA theory was applied on the business valuation in this thesis.At first, the historical process and connotative meaning of valuation was expounded. After the common valuating data, such as DCF, IRR, MVA, Excess Return had been analyzed, compared and commented, it was put forward that EVA had the advantage on the business management. Then, the theory, calculation and connotative meaning of EVA management evaluation system were introduced. After that, with an example of EVA valuation, the execute procedure of EVA valuation was described in detail. At the same time, the feasibility analysis of the EVA applied on valuation was carry out. At last, it was put forward that enterprise would sustained develop by EVA valuation combined with business strategy.EVA is applied in enterprise valuation, interacting with business strategy. It can promote enterprise value management, and benefit enterprise development. EVA's application field in economic management is opening up end to end. With the establishment and improvement of modern enterprise management system, EVA would show its advantage in the enterprise management of our country.