Study On Estimating TR Company’s EVA Based On Behavioral Corporate Finance

TR co., LTD. is a local high-technology enterprise in feed industry, which evaluates the administration in accordance with the EVA index evaluation results. However, there are two outstanding problems in the current estimating method: EVA calculation only for business activities in the company can’t measure performance across the board; a unified capital cost calculation of EVA can not accurately evaluate enterprise’ performance. This paper studies on Estimating TR Company’s EVA Based on Behavioral Corporate Finance.Firstly, to analyze of the characteristics of the TR company and business situation and describe the actual limitations of current estimation methods.Secondely, to extract EVA estimation method and logical steps based on behavioral finance, by EVA related theory and literature research of behavioral finance theory. Finally, it’s to estimate the EVA of TR company in 2012 and 2013. The first step is the Scope definition of EVA calculation in TR, and the accounting adjustment project selection and calculation; the second step is building momentum portfolios based on BAPM, the calculation of a total of 60 phase correction momentum index in five years, and the yield of each issue; the third step is the calculation of business activities’ EVA based on behavioral finance; the fourth step is the calculation of investment activities’ EVA based on behavioral finance; the fifth step is the calculation of non-business and financing activities’ EVA based on behavioral finance; the last step is the sum and analysis of TR company’ EVA.This paper summed up the TR company’s EVA estimation method based on behavioral finance(including six steps) and specific instructions, parts of the process can continue to applicate in the future in TR company and related business. EVA estimation method based on behavioral finance is more accurate to measure the enterprise’s value. Through concrete application of TR in 2012 and 2013, we can see the EVA is 90291012.43 yuan and 49103821.03 yuan respectively. The business activities create maximum EVA and are accounted for 97.26% in 2012, while non-business activities in 2013 are accounted for 87.70%. The business activities of EVA dropped sharply in 2013 compared to 2012, given the problems in the industry and the enterprise. In addition, the investment activities are always ruducing the value as a strategic investment. There are significant differences between the method based on behavioral finance with the current method of EVA.