The Application Of EVA As An Assessment Method In Household Appliances Industry In China

Over the past few decades, the economy of our country has experienced a process of rapid development. This development has led to the rapid expansion of all industries. We can find so many products printed "made in China", and we have become the factories of the world. We face many problems, for example, the air pollution, water pollution, resource depletion and so on. It is imperative to change the development mode. Household appliances industry has become the highest marketization in China. Its popularity can pulled commercial development in other industries. However, the household appliance industry is still at the end of the world’s value chain, and the companies mains for product assembly. The core of the technology that can bring about lasting competitiveness is still abroad. Obviously, if the situation doesn’t change, our household appliance industry will always get little profit and we can’t go to the top of the world industrial chain. It is essential to reflect the real performance of enterprises. EVA performance evaluation system is the new management ideas and methods to solve the problem. EVA is the current mainstream enterprise evaluation method and it can analysis the essence value of the company. It provides dynamic reflection and realistic data for managers, facilitate investors. At the same time, it is good for themselves to identify and implement development strategy in the future. In this paper, according to the characteristics of the home appliance industry and taking EVA as the core system of value management idea, we discussed the implement of EVA performance evaluation system from the perspective of performance evaluation. This article tried to analyze EVA calculation of Hisense electric co.,ltd. Assist financial indicators and non-financial indicators make evaluation to enterprise’s operating conditions at the same time.In the first part, it is mainly for production of EVA and development overview, and introduces domestic and foreign research results about the EVA. In1989, the company of Stern Stewart launched the concept of EVA. The 《FORTUNE》 magazine loaded an article called EVA is the golden key creating the value, then EVA became a household name in1993. It is the economists conducted in-depth study that put forward its popularity. Around the EVA theory research mainly includes three aspects, including EVA is how to embody the value of the enterprise, how to use EVA index to evaluate business performance, how to apply EVA to reduce phase of the enterprise agency cost and incentive for managers. In China, EVA has attracted great attention at the beginning of the end of the20th century, published several papers that introduced and reviewed EVA such as accounting research. In September2001, Stern Stewart operations in domestic published many companies’ position based on EVA value creation. Subsequently, Qingdao beer, Sinochem International Corporation start the EVA management concept. In the second part, it mainly introduced the concept of EVA, its calculation and comparison from other performance evaluation method. Real EVA can reflect the true value of enterprise, then it need to adjust the accounting data to get the accurate EVA. Adjustment importance principles include the principle of caution, the flexibility and adaptability principle. Details of items include research and development costs, goodwill, inventory, changes in fair value gains and losses, all kinds of impairment, deferred income tax, sales cost, government subsidies, non-operating income and expenses, operating leases, financial expenses, etc. EVA indicators designed to overcome the disadvantages of net interest rate of the rights and interests of the short-term indicators, focusing on the long-term development of the enterprise, and put forward challenges to the financial accounting standards. It is encouraging enterprises to increase research and development costs, to give enterprise to bring the long-term benefits investment decisions. Compared with the balanced score card, the advantage of EVA is easy to assess and measure. It adopts a financial calculation method to evaluate the enterprise performance, avoiding the balanced score card in the uncertainty of weights of the various options. In the third part, it introduced the history and characteristics of China’s home appliance industry, development prospects and choose Hisense electric appliance as the research object, and then get the Hisense electric EVA calculation result.Household appliances has become a modern life indispensable items, household electrical appliances create comfortable life for people and also helps to relieve the tense life pace of modern society at the same time. Chinese household appliance industry mainly has big scale, quick updated, diversify marketing channels, etc. Hisense is chosen as the research object, because Hisense has rapid development, large scale, advanced technology, high brand awareness, good social image. And market competition ability is strong. Through the calculation found that there are some problems in the enterprise. Hisense electric appliance capital scale amount is increasing, the cost of capital is rising and company product is single.Theses problems result the bigger risk. To solve these problems, Hisense should improve the efficiency of capital use, pay attention to enterprise development, and enterprises should actively open up new markets. Finally according to the existing problems, we have to think its application prospect.EVA performance evaluation system has some problems existing in the course of application, including the calculation problem of weighted cost of capital rate, calculation in the process of adjustment problems, the problems of imperfect corporate internal governance structure in China. These problems is not can be solved overnight, but we believe that it will be better and better with the constant improvement of our country capital market, joint-stock reform of listed companies, strengthening shareholders diversity structure and the international accounting standards convergence. It worth us looking forward to the future of EVA.