A Study On The Capital Cost In The Application Of The EVA In State-owned Enterprises

The state-owned enterprises (especially the central enterprise) in our country are the main force of the socialist economic construction, and they also act as the core force for the stable and healthy development of the securities market. William.O. Petter, the deloitte chief executive, said "Strengthening the operational responsibility system for the state-owned assets management and establishing scientific operational performance evaluation system are more important than balance sheet", so the study on the business performance in state-owned enterprises is very necessary. Economic value added (EVA) is a new kind of index for performance evaluation. Compared with the traditional financial indicators, it emphasizes the opportunity cost and pays attention to the effective use of the capital and the ability of value creation. From2010, the SASAC introduces the EVA as a method of evaluation comprehensively, which not only means that the performances evaluation turns its focus from income to the value creation, but also it means that the financial management objectives will come back to the "maximization of shareholder wealth" from the previous "profit first".Introducing the evaluation method of EVA is undoubtedly a progress of management concept. But this is the first time for the central enterprises to adopt the EVA to assess its performance, its relevant provisions still have some problems and need to be polished. For example, the general concern of the rate of the capital cost, which kind of value should the capital cost use, the book value, or the fair value? Working out the problems in adopting the EVA is not only helpful to to access the ability to create value in the enterprises and help the managers to make the right decisions, but also it can help the whole society to allocate the resources reasonablely and improve the efficiency of resource utilization.This article combines the normative research with case analysis. This article puts forward some suggestions on the problems existed in the adoption of the EVA in the enterprises. Those problems were presented from the analysis of the case that the enterprise adopt the EVA as its evaluation method and from the foreign theoretical study and practice abroad. This article has five chapters:The first part, Introduction. This part introduces the study background and significance, the research content and structure as well as the method and the process of this article.The second part, the summary of the theories. This part explains the origin of the EVA theory, its development, assumptions, calculation method, adjustments, as well as the advantages and disadvantages of the EVA and its application condition.The third part, The analysis of the adoption of the EVA in Qingdao Haier group. This part analyses the financial figures of the Qingdao Haier group from2008to2010,and calculate the difference between the EVA using the practical rate of the capital cost and the EVA using the rate of the capital cost that is set by the SASAC.The fourth part, the problems existed in the EVA and the solutions. This part is the focus of this article. This part mainly introduces the application situation of the EVA at home and abroad. On the base of the second part,t his part explains the problems existed in the adoption of the EVA by the enterprises as well as its influence, and proposes some suggestions.The fifth part, The problems need to be concerned while promoting the EVA. This part analyses the improvement of the quality of the accounting information that need to be noticed while promoting the EVA, the applicability of the EVA in different industry, seting the rate of the capital cost for different industries and the problems in the short-sighted behavior while applying EVA. This part also give some suggestions to solve the problems.