Value Management Of Enterprise Based On EVA

As profit organizations, the decision-making processes in enterprises are focused on profitability. As the change of managing target happens, the maximum target of enterprises'value is gradually accepted and becomes the most reasonable managing target after the maximum target of profit, maximum target of stockholders'wealth. How to reach this target is the issue that this paper will mainly probe for.Value management is orienting value as the basis of making strategy, financing arrangement and company governance, keeping the continuous advantage of competition, so that enterprises can reach the maximum target of value. EVA is exactly providing the most effective method for value management. This method positively considers the cost of capital, rational investors are expecting that their investing money will profitable, i.e. the incremental profit. The theory and practice of EVA is more mature in western countries, and plays a important role in economy. However, research on this theory in China is just at the beginning line, as the reform and openness of China's economy deepens and the system develops gradually, EVA will be widely used and play an essential role.This paper compares the traditional value estimating methods with the EVA so as to find the accurate and objective advantage of EVA, then based on the successful cases of EVA abroad ,we make research on the external conditions to do comparison with the conditions in China's capital market, we conclude the reason of failure of practice on EVA in China. Besides the disadvantages of EVA itself, more important thing is the limits of outer circumstances. But along with the entry to WTO, continuous improvement of outer circumstances, EVA will have a good future as referred to the practice aspect in China.