Evaluation Of Alibaba's Enterprise Value Based On EVA

The core and fundamental goal of modern enterprise management is to pursue the maximization of enterprise value.Enterprise managers,investors and other stakeholders understand the real value of the enterprise through enterprise value assessment so as to correctly conduct value creation activities and rational investment decisions.With the rapid development of e-commerce industry in our country,the research object of enterprise value evaluation has gradually shifted to e-commerce enterprises.In the meantime,Economic Value Added(EVA)was developed by Stetson Management Consulting Company in the mid-to-late 1990 s and is widely used in the enterprise value assessment of various industries.It is a very effective value evaluation index.In order to understand the value of the enterprise more accurately,it is necessary for us to use EVA to evaluate the enterprise value.Therefore,we choose Alibaba,the most representative enterprise in the e-commerce industry,for research.Firstly,through literature review and comparative analysis,this paper elaborates on the advantages and disadvantages of market method,cost method and income method when evaluating the enterprise value.It shows that the EVA method in the income approach can truly reflect the ability of enterprises to use all the capital to create value,thus choosing the EVA method to evaluate the enterprise value of Alibaba.Secondly,different enterprises are in different industries,operating conditions and the overall macroeconomic situation.In the process of enterprise value assessment,they should give full consideration to the stage of development of the target enterprises in order to select the appropriate enterprise value assessment model.Combined with Alibaba's own characteristics,we choose the two-stage EVA value assessment model.Finally,the 2017 Alibaba EVA value is calculated based on the financial statements of BABA for 2014-2017 and the expected EVA for the high-speed growth period and the steady growth period are predicted by forecasting the balance sheet and income statement for 2018-2022 Value,and then get Alibaba's entity value in the evaluation base date March31,2017.The results of this study show that EVA is an effective way to evaluate Alibaba's enterprise value.By comparing with its market value and free cash flow valuation method,it is concluded that EVA can reflect Alibaba's true corporate value.EVA considers the cost of equity capital in the cost of capital of the enterprise and establishes the concept of creating value for shareholders.It not only analyzes the problems existing in the application of EVA valuation in Alibaba,but also constructs constructive suggestions to investors,managers and policy makers,In order to continuously improve corporate value,we must pay attention to creating shareholder value,introduce EVA performance appraisal system actively,establish good corporate governance mechanism,and allocate various resources of enterprises effectively and reasonably,so as to ensure the long-term development of enterprises.