The Enterprise Valuation Based On EVA

With the establishment and improvement of China’s socialist market economy, corporate mergers and acquisitions become increasingly frequent, enterprise valuation is also more and more important. In recent years, among all kinds of common methods of corporate valuation, the Income approach of which the advanced Economic Value Added (EVA) approach has widely applied to the evaluation. The study for this paper is Chinese Medicine Company, using of theoretical analysis and empirical analysis method, and taking the theory of EVA valuation in theoretical and operational depth inquiry.This paper is divided into five parts:the first part is theoretical analysis. With the origin of enterprise valuation theory, then studies Irving Fisher’s capital value theory, Miller and Modigliani’s MM model, and William Sharpe’s pricing model; hereafter analyze the four basic methods of evaluation and make a comparison. The second part is model construction. Starting from the EVA model formula, this part analysis the accounting adjustments rules, expounds the calculation methods of NOPAT, TC and WACC, then constructs a corporate valuation model based on EVA theory. The third part is model adjustment. In the terms of the nature of Chinese Medicine Company, this part is analyzed the particularity of Yunnan Baiyao Group Company Limited’ valuation. The fourth part is empirical test. Using empirical analysis to apply the EVA method to the evaluation of Yunnan Baiyao Group Company Limited, then draw a conclusion and make some analysis and verification. The fifth part is a summary and prospect of this paper, describes the limitations of the study and some sections need to be improved.