Enterprise Value Evaluation Based On Economic Value Added(EVA)

The traditional system of performance evaluation and encouragement has been questioned and challenged by more and more scholars since 1990s. The objective of the company is to maximize shareholder's value, which should be thereby reflected through performance measurement. However, the traditional accounting profit and resulting measurement cannot truly indicate shareholder's value creation, partly because they neglect the cost of equity and can lead to value distortion subject to accounting principles. In this case, EVA pattern, due to it really reflects the enterprise's value, has been developing rapidly in theory and practice since it was published.Economic Value Added is invented and developed by Stern Steward&CO. of American as an appraisal method. EVA considered the capital cost comprehensively, which can reflect enterprises value-added truly. In a sense, research and application of EVA in our country is still in stage of starting. 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.This thesis uses the method that not only the theories analysis and the case analysis but also quantitative analysis and qualitative analysis combine together. The author firstly introduces why to choose the topic, the purpose and the content. Secondly, takes an introduction to the theory foundation of the way of evaluation in brief. Thirdly, contrastively analyzes EVA model and the other evaluation models in the highest flight, explains it's most major characteristics is which reflects the true value and real performances of the companies, in view of equity capital, considering the future of companies. Finally, the case analysis, this thesis apply the EVA model to calculate the evaluation of Wafangdian Bearing Group corp.The characteristics of this thesis lie in to display all the valuation process in detail and study of Wafangdian Bearing Group corp., and discuss Chinese enterprises should pay attention to the problem and measures.