The Introduction Of Eva Theory To Improve The Financial Management Of Aerospace Enterprises Funded

The company-subsidiary system derives from the enterprise legal person becomes the investment entity as a shareholder. Just as corporate finance management was called manager financial management, the financial management of the parent company toward the subsidiaries was called Shareholder Financial Management(SFM). The essential management object of SFM is to enjoy such rights of owners as benefiting from assets of its subsidiaries and to insure the subsidiaries organize their production and operation for the purpose of raising economic benefit, maintaining and increasing the value of its assets.The state-owned enterprises(SOE) are the backbone of the development of national economy. At present, the reform of SOE aims to establish modern enterprise system and rebuild SOE into standardized corporations. The corporation system of modern enterprise is agency-principal system based upon the separation between ownership and managing right. Because there are many middle layers in the agency-principal chain of SOE investment management, so there are both the agency risk and principal risk within SOE. The union of institutes and manufacturers is the typical organize structure of the aerospace industry, the whole union is a parent company and these institutes and manufacturers are its subsidiaries. The enterprises of aerospace industry are wholly state-owned, they have not only the common characteristics of SOE for instance the agency risk and the principal risk, but some particular, for example particular capital structure and because of the income from nation according with the costs of the present products, in order to get more dollars from nation finance ministry, the aerospace enterprises try their best to increase the costs and expenses of their products. Based upon the separation between ownership and managing right, it is key issues to evaluate the qualities of entrepreneurs and incentive & disciplinary mechanism of operators and to measure maintaining and increasing the value of shareholder wealth. Economic Value Added(EVA) is the financial performance measure that comes closer than any other to capturing the true economic profit of an enterprise. EVA also is the performance measure most directly linked to the creation of shareholder wealth over time. Put most simply, EVA is net operating profit minus an appropriate charge for the opportunity cost of all capital invested in an enterprise. By taking all capital costs into account, EVA shows the dollar amount of wealth a business has been created or destroyed in each reporting period.Through the implementation of EVA-based SFM and incentive compensation system that gives managers superior motivation to create the greatest shareholder wealth. Because EVA is the only financial management system that provides a common language for employees across all operating and staff functions and allows all management decisions to be made always in terms of the value added to shareholder investment, it can conclude that EVA-based SFM is one of the best ways for the purpose of raising aerospace enterprises economic benefit, maintaining and increasing the value of state-owned assets.