Building The Eva-based Business Management Financial Structure

EVA, Economic Value Added, is the balance after deducting capital expenses from NOPAT. EVA is based on economic profit; reflect objectively the value-creating status of an enterprise. Measuring performance with EVA, providing incentives and making decisions on EVA basis, an enterprise can be governed to strive for shareholder' s value. Since it was founded by Joe. M. Stern in 1982, EVA has become popular in western; but in China few research into the application of EVA to corporate governance up to now.However, under the present situation of corporate governance and capital market, more and more Chinese enterprises will have to focus themselves on maximizing the stockholders' value, so as to bring the managers' benefit into line with the owners' benefit, and raise money at low cost on capital market.In the light of EVA theory, this thesis puts forward a EVA financial frame work composed of measuring and evaluating system,incentive system, decision support system, gives concrete suggestions on construction of this frame work and its sub-systems, which, we hope, will help enterprises in changing their staff's behavior, molding value-oriented enterprise culture, and ultimately motivate enterprises to create value for their shareholders continuously.This thesis probe into the establishment of EVA performance measuring system, incentive system and decision making system in general meaning at first. Then discuss practical solution for applying EVA to state-owned enterprises of our country.