Business Performance Review By EVA

Economic Value Added (EVA) has been claimed to be a single measure of business performance by Stern Stewart & Co. in the United States. It adjusts reported accounting results to eliminate distortions encountered in measuring true economic profit. The underlying premise is that all capital has a cost, therefore, EVA is the residual income after taken into consideration of the cost of all capital employed to produce the true economic profit, create value for shareholders and reflect the real economic substance of a firm.For applying the theory of EVA on a case company to study its business performance review, Ocean Grand is the main case company in this thesis and Aluminum Corporation of China acts as a comparable one for contrast purpose.This study therefore tests whether the above assertion is a better measure than traditional accounting earnings and financial performance in providing useful information to a firm on corporate performance.In the final conclusion and suggestions, the results support the assertion that except the merit of EVA lies in the aspect of growth, EVA and traditional accounting measure are the same better performance valuation tool to help corporate managers to implement value-added business strategies for performance improvement as well as promotion on competitive advantage. Further studies may explore these in deep or other aspects.