Application Of Economic Value Added (EVA) To Evaluation Of Listed Company

In recent years, the capital market system construction of China took a significant progress. Especially the fundamental problem-reform of non-tradable shares-which fazing the capital market system is solved basically in 2006. It enables the market to have fundamental transformation. How to appraise public company's actual value? Not only it is an important topic searched after long-term by securities business, but also it is the investors' most concerned issue under the mature market environment day by day. Providing a feasible method to solve this problem is this paper's purpose.EVA Value Evaluation Model derives from EVA index and traditional model, it evaluates enterprise's value from the shareholder's angle, and it reflects the intrinsic value of the enterprise. Its two biggest merits lie in two points: one is the consideration of Equity Capital Cost of estimating company management achievements, embodying the principle of the paying use for stockholders' capital; the second is proper adjustment on income statement and balance sheet, removing the distortion of different account dealings on profit of after-tax and input capital value. The EVA model evaluates company's value through forecasting annual EVA value.The study of the EVA Value Evaluation Model not only helps to perfect the value evaluation system but also helps to improve the decision ability of the investors and administrators, which has long-term effect both in theory and in practice.In this paper, we are guided by value invest, set the mostly keys by EVA, by virtue of case analysis and theoretical analysis combined, emphasize particularly on the research of the operation of EVA Value Evaluation Model in evaluate a company's value. This paper is composed by six parts.Chapter one is the foreword, it mostly says the background of this paper, the significance of this research, the summary of the research, the intent of the research, the method of this research, and the configuration of this paper. It generalizes the development of the Value Evaluation Model in China. Following the predecessors, this paper did all-sides analysis and reasoning for EVA in criterion and case analysis, including the theoretical model and applied model. In chapter two,we are look back for the sutra basic theoretic of Value Evaluation Model in corporation, and compared some of the common Value Evaluation Models. In the third chapter, we compared with the former of EVA——Residual Income, explain the strongpoint of EVA. Then, particularly introduce the economic meanings of EVA, and the counting process of it. In chapter four, establish the EVA Value Evaluation Model. That is the emphasis of this paper. The paper addresses two kinds of specific forms of the EVA Value Evaluation Model in theory: EVA Steady Growth Rate Model and EVA Two Stage Growth Rate Model, and addresses four kinds of specific forms in practice: EVA Value Evaluation Model used in the growing up type, in mature type, in limited survival type, in value destroyed type, and put forward the idea that EVA Value Evaluation Model is more suitable for calculating the inherent value of the growing up type new high-tech enterprise. The fifth chapter deals with the application of the proposed model. Specifically, Zhongxing Communication Corp. is through EVA-based valuation model. In the end, EVA Value Evaluation Model has applied cost in China, and put forward the application prospect of the EVA Value Evaluation Model.The innovations of this paper are as follows:1. The paper has the idea that EVA Value Evaluation Model derives from EVA index and traditional model, reflecting the inherent value of enterprises;2. The paper addresses two kinds of specific forms of the EVA Value Evaluation Model in theory: EVA Steady Growth Rate Model and EVA Two Stage Growth Rate Model;3. The paper has the idea that EVA Value Evaluation Model is suitable for calculating the inherent value of the growing up type new high-tech enterprise;4. This paper displays all the valuation process in detail, and study of the aspect is relatively less in the domestic, because in the domestic most of this kind of research just introduced the model from the theories angle, or give result directly. The purpose lies in inquiry into the concrete calculation step. It is the author's desire that this paper will offer some help to the investors who use the model.