The Study Of Financial Performance Evaluation Base On EVA

The characteristics of modern enterprises is separation of ownership and management rights. This poses a problem of agency costs. Incentive mechanism is a means to solve this problem. And yardstick of incentive mechanism is performance evaluation. So performance evaluation is the key point to governance modern enterprises. Traditional financial performance evaluation base on ROE have a problem that ignore the cost of equity capital. And the basis—accounting standards having some dispute, so it's criticized by many scholars. Eva, as a solution method to these problems, is proposed to shows it's superiority.The significance of this study mainly performance in the following three parts. First, the existing research literatures lack of detailed calculation of EVA. Second, this article tries to use analysis of case studies to distinguish between EVA and traditional indicators of performance evaluation. Last, Aluminum Corporation of China Limited has the lowest EVA, but judging from the net profit is not so bad. So the studying of Aluminum Corporation of China Limited is meaningful. This study hopes to find existing problems of Aluminum Corporation of China Limited by studying EVA.First, this article introduces the research background and significance, then introduced the theory and the basic theory research. The third part introduced Aluminum Corporation of China Limited's the current system of financial results and made analysis and evaluation. The fourth part detailed calculation Aluminum Corporation of China Limited's three years'EVA, and made analysis and evaluation. The fifth part is the improvement measures to CHALCO. Last, this article summarizes the differences between EVA and the traditional evaluation system.This article mainly has four views. First, it's the high cost of equity capital, particularly in the time when financial difficulties take place. Secondly, CHALCO. borrowed a lot of debt when the global financial crisis happen. This destroyed the value of the enterprise. Third, the greatest impact to CHALCO'three years EVA is NOPAT. The cost of capital has little effect. Finally, the biggest difference between EVA and net profit is the cost of equity capital. Accounting adjustments' effect is not obvious.This article' contribution is analyzed by the way of case studies. This makes more vivid views of this article. And there also exist some insufficients. Case studies can only represent the individual, so the views lack of convincing. And because of the limitations of research, we can't comprehensively make accounting adjustments and precisely calculate the cost of equity. So the EVA have some deviations.