Research On Performance Evaluation Of Nan Electric Company Based On EVA

Performance evaluation of enterprise and value evaluation are always difficultproblems and hot spots to the accounting profession and business practice. With thedevelopment of market economy, value maximization idea is deeply rooted, butobvious defects of the traditional financial measurements loom large.It is difficult toreflect economic value of enterprise. Economic value added (EVA), as a newindicator of performance evaluation, which has various advantages in evaluatingenterprise real profit, promoting value creation, and principal-agent conflictcoordination, etc, are more and more widely used. State-owned Assets Supervisionand Administration Commission of the State Council promulgated head of the centralenterprise operating performance evaluation method by the end of2009, specifyingEVA as a key indicator of the state-owned enterprises operating performanceevaluation, and more and more state-owned enterprises begin to implement EVAassessment. As a result, research on performance evaluation of state-ownedenterprises based on EVA has important theoretical value and practical significance.First of all, this article, applying the method of normative research, discusses thetheoretical foundation and essence of EVA concept, analysis the internal relationsbetween EVA, economic profit and residual income. In the meantime, it studies theeffects of EVA on improving the earnings quality and usefulness of de cision of theaccounting information, as well as the pivotal role of EVA in performanceevaluation. Secondly, through case study and comparative study, this paper analysisdifferences of Nan Electric company performance on the bases between EVA andtraditional financial index evaluation, proved that the EVA relative to traditionalfinancial index has advantages in terms of performance evaluation. And then, itdiscusses present situation and problems of EVA application in the Nan electriccompany, including EVA evaluation standards, evaluation index calculation,evaluation system design, etc. Finally, It puts forward some suggestions, includingclearing EVA evaluation criterion, supplementing calculation details, besides itdiscusses how to establish achievement evaluation system which taken EVA as thecore indicator for Nan electric company.The purpose of this paper is to provide positive thinking, on the one hand,driving the implementation of EVA performance evaluation method and the improvement of the performance evaluation system for state-owned enterprises, onthe other hand, promote EVA appraisal scheme which is formulated by State-ownedAssets Supervision and Administration Commission. It is hoped that these advicescan make EVA performance evaluation play a more important role on boosting theefficiency of the state-owned capital, maximizing the value of national assets,strengthening the state-owned assets supervision and management, optimizing theallocation of social resources, and even setting up a fair competition mechanism.