Business Valuation Eva Based Of Cnpc

China’s capital market, due to the relatively lately start, is not perfect. Most of the traditional business valuation methods are deveployed around the accounting profit. It makes coporation managers fail to discover the importance of the opportunity cost and the cost of capital, which can easily lead to short-sighted behaviors. There is no doubt that these behaviors can reduce profit and hinder the healthy development of China’s capital market. EVA(economic value added)is net operating profit after tax subtracting the value of the total investment cost of capital (including equity and debt). The core of EVA is the capital investment has cost, so if a coporation want to create value for shareholders, its corporate earnings must exceed its cost of capital. EVA is a kind of efficient method to evaluate performance of managers, which reflects the ultimate business objectives of corporations. Thus, EVA is the foundation and core of the enterprise value management system. In2007, State-owned Assets Supervision and Administration Commission (SASAC) began to encourage central enterprises to use the EVA on business valuation, and in2010, SASAC formally declare EVA has been an important part of the enterprise value management system as the basis of reward, punishment, employ and dismiss.Now, more and more large state-owned enterprises has discovered the importance of the cost of capital, and gradually realized the importance of EVA.This case-based paper study the enterprise valuation on the base of EVA. First of all, on the basis of theory, this paper expounds the theory of corporate value and EVA, and the current situation of the development of EVA in China to construct the theoretical framework of this paper. Then, it analyse advantages and limitations of various methods of business valuation, ultimately, this paper select EVA method, what’s more, it proposes the advantages of EVA:consider the cost of capital, break the limitations of traditional concepts and so on. Later, on the basis of China National Petroleum Group’s financial reports, this paper forecasts the future EVA of this enterprise, calculate enterprise value, and analyzes the correlation between corporate value and stock prices, illustrates how can EVA influence companies management and operation. Finally, this paper summarizes the proposed vision, lists the problems which should be noted in practical application, and gives advices about how to take EVA as core to bulid the value management system on the basis of present situation of China’s capital market. By the same time, this paper points out the urgent problems in practice. In the fourth chapter, we calculate of the future EVA and enterprise value. The appearance of EVA enterprise value system marks the establishment of the new management model and value assessment system. This new system can reflect the overall enterprise value more accurately compared to the traditional assessment methods. EVA enterprise valuation method takes into consideration all aspects of the company’s balance sheet, income statement and statement of management, which pays more attention to the interest of investors compared with the traditional evaluation methods.