The Reasearch On The Developing Of Performance Evaluation System Of Donghai Company Based On EVA

In2010, the SASAC issued the ’head of the central enterprises performance evaluation Interim Measures ’ with the economic value added (EVA) index instead of the net return on assets (ROE) targets, and thus began the implementation of value management in the central rate of the process.Donghai Company is the large central enterprises under the company’s wholly owned subsidiary of its parent company in accordance with the requirements of the SAC to implement EVA in the whole group assessment.This paper reviews the theory of the origin and development of EVA, EVA proved to be superior in performance evaluation system of traditional indicators.Then a detailed analysis of the calculation of EVA, the first calculation process analyzed the reasons for the accounting adjustments, accounting adjustments and adjust the principle of matter, and then analyze how EVA calculation process to determine the weighted average cost of capital. In the weighted average cost of capital involved in the process of determining the cost of debt capital rate calculation and the calculation of cost of equity capital ratio. Complete discussion of the calculation method, evaluation of EVA as the benefits and drawbacks has conducted some research.Donghai company’s performance evaluation system to develop the existing performance evaluation system is based on the implementation. The existing performance evaluation system is the KPI performance evaluation system, which is based on an ROE target for the core evaluation system. New performance evaluation system is to the KPI system as the core ROE into the KPI system as the core of EVA. In this paper, the development of KPI system was reviewed, and pointed out that the ROE for the core indicators of performance evaluation system and the shortcomings of KPI. in practical applications, to determine EVA calculation formula should take many factors into account. And find a balance between accuracy and simplicity.The performance evaluation of Donghai Company is based on the core indicators ROE. New performance evaluation system is based on the core of EVA. This article analyzed the Donghai company’s financial data in the. last five years based on the two performance evaluation systems and discovered that even if in the years when the company’s ROE was very good,whose EVA also could be terrible.And the paper proposed a solution of this apperance.Finally,a conclution is made that a performance evaluation system based on EVA indeed can services the goal of Increasing shareholder value.