| After China joined WTO, the Chinese stock market will be gradually maturing, the value based investment will be received by investors in the future. In our current stock market, the quality of listed companies are different, there are so many insider trading and other covert operations, it becomes difficult for investors to make right choice. The economic value added (EVA) was founded by Stern Stewart consulting firms of the United States, it is a useful tool for the stock analysis. It is the result of the net operating profit after tax (NOPAT) minus the capital cost. EVA have two advantages: first, in evaluating the management performance, not only to deduct the obligation capital cost, but also to deduct the rights capital cost, for reflecting all of cost to obtain the profit; second, EVA carry on some adjustments to the balance sheet and income statement, in order to remove the distortion of NOPAT and total capital which was caused by different accountancy the processing procedure and methods.The paper first introduce the conception and theory foundation of EVA. Then, the paper offer a calculation model for the listed companies in China, the paper also give a detailed calculation processes of the EVA of Wuhan Iron and Steel Corporation (WISCO). This paper hopes to provide some useful references to the investors through this demonstration of the EVA model calculation steps. And then, the paper analyze the EVA and the traditional account index. The paper explore the relationship of the WISCO's EVA and its stock price in the past five years. The paper analyze the factors which can increase the company's EVA, the author wish to give the investor a useful method to have a comprehensive understanding of the company's operating and management level. In the end, the paper analysis the market environment, production capacity, the supply and the request, the cost of the iron and steel industry, and have a prospect of WISCO's future. Weighted average cost of capital... |
PDF Full Text Request