The Discussion On Performance Measures

More and more corporate focus on value management and creating value is the most important target for managers. Performance evaluation measures are important on measuring whether or not a corporate creates value. This paper is focused on the discussion of performance evaluation measures.Traditional accounting measures like earnings are commonly used in practice. But there are disadvantages of it, both in the term of economic theory and practice. EVA was introduced with the development of management theory. The key idea of EVA is to consider cost of capital when calculating profits, which can restrict the bad management on assets scale and avoid low efficiency.When calculating EVA, accounting earning should be adjusted to NOPAT to reflect the actual economic return of corporate. The detailed adjustments are discussed in this paper. With the development of EVA, a series of index associate with it were introduced. This set of measures is compared with the others based on traditional accounting rules.Several corporate of steel industry in China stock market are selected as an example to illustrate the EVA calculation and the comparison between EVA and traditional measures.In the section of conclusion and suggestion, how to use EVA for motivation and evaluation mechanism in practice is discussed.