The Study On EVA Financial Management System

Economic Value Added was founded and developed by the consulting firm of sternStewart & Co. in the 1990s. Obviously the traditional evaluation methods based onaccounting profit, considering the debt capital, didn't consider the equity capital. In fact, nomatter debt capital or equity capital shouldn't be used by enterprises for free. However, equitycapital is an opportunity and hidden cost .EVA, which considers the capital cost rate of equitycapital, surmounts this defect.A I·Ehrbar , the senior editor o《ffortune》,record that :EVA is a management revolution inmodern and a real revolution. EVA is not only a high quality performance evaluation andcomprehensive financial management frame, but also a motivative mechanism. It could affectall firm decisions from directorate to department. EVA could change the firm culture.Since Economic Value Added was founded and developed by the consulting firm of sternStewart & Co., there have been more than 400 companies to imply EVA financialmanagement system, including Coca-cola, Siemens, and Sony and so on. Even somegovernment institutions like Port of Singapore Authority, adopt EVA system to measuregovernmental investments. All most companies adopting EVA have improved theirperformance, motivated Employers.This article obtains from the EVA elementary theory, by the EVA financial managementdecision system, the EVA achievement appraisal system, EVA management salary systemthese three large-scale systems constructs a more complete EVA financial management systemframe, and has carried on the brief analysis in this foundation to our country enterprise usingEVA financial management system some questions, has the certain guiding sense by the timeto our country enterprise using the EVA financial management system.