Research Of The Construction Of EVA Financial Management System

In the 1980s, Stern Stewart & CO. financial company in the United States first proposed the concept of EVA (Economic Value Added). Since then, EVA has been respected by majority of theorists and practitioners as it is an innovated performance evaluation. Performance evaluation of traditional corporate is profit-centered, it mainly focus on the cost of corporate debt capital without considering the cost of equity capital. In fact, companies use both debt capital and equity capital as a price to pay, but the cost of equity capital is usually neglected as an opportunity cost and a hidden cost. EVA can make up for this shortfall because it takes the account of equity capital into consideration.Currently, the theoretical study of EVA abroad is more thorough and comprehensive, covering all aspects of EVA. And in a long time, the domestic EVA study is mainly focused on how to use EVA as a corporate governance standard and performance assessment. We still need more superficial research to make the EVA financial management more complete. In fact, EVA is not only just an indicator, but also a management method.This article aims to build a financial management system based on EVA, which consists of EVA financial management decision-making system, EVA performance measurement system, EVA incentive pay systems and EVA risk control system the four parts. On this basis, it will take a brief analysis of the current use of EVA financial management system in China's enterprises to improve and develop the EVA theory.