Research On The Application Of EVA Theory To Performance Evaluation Index In State-owned Enterprises

The enterprises of our country are getting more and more opportunities and correspondingly challenges are bigger and bigger, after China has entered WTO. Under this environment, the functions of government management and the mechanism of enterprises'supervision have changed greatly. The evaluation of operating performance becomes the focus that most owners and managers are concern about. It is of great practical significance for the management, reform and development of state-owned enterprises to research deeply into this problem and to establish a scientific and normative system of enterprises'operating performance evaluation as soon as possible.Economic value added (EVA) is a performance evaluation and management system proposed by American Stern Stewart & Company based on the market value of companies. It puts all capital cost of a company into performance evaluation and combines the profit of enterprise owners with that of enterprise runners. EVA makes up for the defects of traditional performance to some extent and reflects the real running performance of an enterprise. EVA index has been applied to many large enterprises abroad, but it is just in a preliminary stage in state-owned enterprises of our country. With the in-depth reform of our country's state-owned enterprises and the requirement of modern management model, state-owned enterprises will certainly put value creation as their primary goal. The paper tries to analyze EVA index in a systematic way so as to find a wider application of it to state-owned enterprises in our country.The paper starts with the detailed explanations of such aspects as the definition of EVA, calculating formula, adjusting principle and items. By comparing EVA index with the performance evaluation index employed by state-owned enterprises at present, the paper holds that it is necessary for state-owned enterprises to choose EVA index as their performance evaluation system. Based on the national conditions of our country, the paper points out the fact that there are certain problems in the application of EVA index, and proposes some adjustments concerning the problems appearing in the application of EVA performance evaluation system to state-owned enterprises. The paper proposes to unite adjusted EVA index with traditional performance evaluation index so as to establish a performance evaluation system, and to combine with concrete conditions of state-owned enterprises, and illustrates the fact that it is a correct choice to apply EVA index to the performance evaluation system of state-owned enterprises.