Evaluation Of EVA-based Business Performance

With the constant change of business environment and the increasingly intensecompetition in the market, the defects of enterprise performance evaluation system in ourcountry are becoming more and more prominent. The comprehensive performanceevaluation system focusing on accounting profit only considers the cost of debt capitaland ignores the cost of equity capital. Therefore it can not reflect the exact value createdby the enterprises and has great limitations. As a result, it can not reflect the businessperformance of the enterprises in all aspects. At the same time, it also prompted someenterprises to seek too much profit targets, expand the scale blindly, take up theinefficient capital too much and use the capital in low efficiency. EVA, as a new kind ofcorporate performance indicators, was put forward in the1980s by Schouten,management consulting companies in the United States. It shows the value of theenterprise increased in certain period of time and has been widely used at home andabroad. Its core ideas are:"pay attention to the cost of capital, encouraging value creationand increasing the service efficiency of funds," These core ideas for promoting theenterprise performance evaluation system in our country will be of great significance.Aiming at the problems existing in the performance evaluation system of enterprises,this article will apply EVA performance evaluation system to the performance evaluationsystem of enterprises on the basis of the existing performance evaluation theory. It willalso propose new ideas to perfect the performance evaluation of enterprises from theAngle of enterprise value maximization. Through analysis of cases, this thesis willprovide certain exploration and complements for further improving performanceevaluation of enterprises theoretically and practically.The research is divided into six parts: The first part elaborates the background,research value, innovation points, insufficient of this topic. The second part reviews therelated literature at home and abroad. The third part elaborates concepts, basic theory and historical evolution related to the enterprise performance evaluation. The fourthpart mainly explains EVA’ s origin, concept, function, method, accounting adjustmentand points out the advantages and limitations of EVA as a performance evaluation.The fifth part compares the EVA and traditional performance evaluation in the“YUNNAN SALT&SALT CHEMICAL Co., Ltd.，” case, and it’s Value drivingfactors. And some suggestions related to establishment of enterprises and implementof EVA are put forward. The sixth part is the end of the article. It gives theconclusion of the article and the deficiency, as well as the prospect of the study.