Study On Economic Value Added Application In Yi County’s Power Grid Fiancial Management

Traditional accounting profit just takes the effect of cost of debt into account, without considering the influence of cost of equity on profit and the owner’s equity. However, this neglect may cause the facts that the financial management target inaccurately reflects the value of the business, and the business managers blindly conduct short-term acts only for pursuing accounting profit. The emergence of the concept of economic value added(EVA) not only makes up the shortcomings of traditional accounting, but also provides the investors a basis of evaluating the value creating ability of the enterprises for the shareholders. EVA is an adjustment of accounting profit in the aspect of economy, so as to calculate the added value of the enterprises.The essential difference between EVA and traditional accounting profit is that EVA recognizes the opportunity cost of the fund from the investors as a factor of influencing the enterprise value, and deducts it while calculating. The EVA obtained after adjusted calculation can accurately reflect the enterprise value,offering a basis of decision for the users of the relevant information. There are some differences between the evaluation results of the EVA index and the traditional evaluation of financial index. In this paper, we regulate and calculate the financial data from 2009 to 2013 of Yi County’s power grid. After that, we compare the result with the traditional evaluation of financial index and find the differences between them. Then, we analyze the driving factors of EVA and finally conclude that cost control is the most important factor of influencing the EVA of Yi County’s power grid.Through this study, we find some existing problems in the financial management of Yi County’s power grid and proposed a solution, which has some practical significance for improving the financial management of Yi County’s power grid.