Eva Management System Theory And Practice

The concept of EVA is well established in financial theory. When the object of a firm is maximizing firm value, the firm adopts the concept of EVA as the base for financial management. EVA means Economic Value Added. It underlies shareholder value and takes the cost of the capital for granted. EVA is easy for understanding and performing and can make the consistence between managers and shareholders. Meanwhile EVA is closely related to NPV. The essence of EVA includes four parts: 1. Measurement 2. Management 3. Motivation 4. Mindset. Moreover we can calculate the EVA on the basis of the NOPAT (net operating profit after tax). Under the new economic environment EVA helps firms to improve economic effect, make correct policy, perfect management and create wealth for shareholders. However, as far as our country, the theory of EVA still has some existent questions which need to be resolved.There are five sections in this thesis:First, the basic theory of EVA;Second, the different and relation between EVA and operating profit;Third, the application of EVA in the west enterprises;Fourth, the practice analysis of the EVA in China;Fifth, the development of EVA-MVA.