| The concept Economic Value Added(Economic Value Added) was advanced by Stewart, an American researcher, and registered by the famous American company Stern Stewart& Co. And Stern Stewart & Co has developed a set of financial management system,decision-making and Incentive Systems based on it. As one of the Performance evaluation methods, EVA is based on operating net profit and the corresponding input to generate this profit, which has overcome the drawback of traditional indicators and can measure the value that the company contributes to the shareholders more accurately.EVA has been popular overseas since mid of 1990s and has become an important supplement to the traditional indicators measuring performance. In China, studies and appliance about EVA is more and more popular, especially after state asset regulatory commission of the Sate Council experiments EVA evaluation in some SOEs owned by the central government. State asset regulatory commission of the Sate Council has decided to practice EVA evaluation within the whole SOEs owned by the central government since 2010, and the state asset regulatory commission of Shandong Province has decided to practice EVA evaluation specific to the SOEs. escrowed by Shandong Province. Compared with the traditional performance appraising methods, EVA is emphasizing the idea of value management and capital cost, and it aims at strengthening the companies'ability to generate value, enhancing the companies'ability to develop and facilitates the companies'sustainable development.Currently, there are relatively more papers about EVA's computational formula, but relatively less papers about how to put EVA into practice within a company. This paper will analyze the traditional performance appraising methods and structure the EVA appraising systems aimed at amending traditional methods'drawbacks. Particularly, this paper will show an example about how to use EVA appraising method to evaluate a company's performance within company H. |
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