【正文】 EVA Manual General Concept Table of Contents General Concept I. Introduction ...................................................................................................................................... 1 1. EVA is a management tool that measures true economic profit ..................................................... 1 2. EVA can be integrated in all key processes ................................................................................. 1 3. Decisionmaking based on EVA.................................................................................................. 2 II. Decisionmaking with EVA ................................................................................................................ 3 A. How to build up EVA on operating unit level .................................................................................... 3 1. Overview................................................................................................................................... 3 2. NOPAT (Net operating profit after tax) ........................................................................................ 3 3. Invested capital ......................................................................................................................... 4 4. Cost of capital ........................................................................................................................... 6 5. Focus on Delta EVA .................................................................................................................. 7 B. How to build up EVA on the Group and SBU level ........................................................................... 8 C. Use of EVA in the XY management system .................................................................................... 9 1. Management reporting ............................................................................................................... 9 2. Capital expenditures ................................................................................................................ 10 3. Portfolio analysis ..................................................................................................................... 11 Details of the EVA Calculation III. Appendix……………………………………………………………………………………………………………._ I. Introduction 1. EVA is a management tool that measures true economic profit All managers of XY should focus on improving the Group?s overall value. With EVA, for the first time, there is a tool that reflects not only the operating performance, but also the expected return on the invested capital of XY. The EVA system encourages managers to think and act like owners, treating the pany?s resources as if they were their own. EVA reflects not only operating profit after taxes, but also takes into account costs for debt and equity capital. Creating shareholder value may be achieved by improving performance, growth, portfolio management and optimisation of capital structure. EVA provides a tool for all of these aspects. EVA is a management tool. It helps managers to evaluate opportunities, set goals, measure results, and benchmark performance. EVA is also an accurate basis for valueoriented incentive pensation schemes. 2. EVA can be integrated in all key processes Typically, panies use a variety of conflicting measures such as earnings growth, earnings per share, return on equity, market share, gross and margin, cash flow, NPV and ROIC. Using a number of different measures leads to conflicting goals. This is why we will use EVA as a single major performance measure. G oal set t i ngPerf orm anceM easurem entI ncenti veSystemStr at egi c amp。O perat i ng pl anni ngEVAO perat i ngDeci si onsCapit al Budgeti ngamp。 Acquisi t i ons The EVA financial management system supports and motivates valuebased decisionmaking for daytoday operating decisions, budgeting and capital planning and strategic initiatives. By using EVA for all of these processes, as well as for performance measurement and incentives, managers of XY will focus on the goal of creating value. _ 3. Decisionmaking based on EVA Although there are countless individual activities people can pursue to create value, ultimately they all fall into one of four categories: EVA can be increased by enhancing operating efficiency (“performance”), investing in valuecreating projects (“growth”) or divesting capital from uneconomic assets or activities (“asset management”). EVA can also be increased by the financing strategy of minimising the cost of capital by optimising the capital structure. E V A =N et O pe rat i ngP rof i t a f t er T ax es( N O P A T ) I nv es t ed C ap i t a l x[ ]Ca pit a l S t r uctureP e r f or ma nc eG r ow t hA s s e t M a nage me ntWei gh t ed A v erag eC os t of C ap i t al( W A C C ) Performance Improving operating profits without tying up more capital in the business will directly increase EVA. Growth Investments in new equipment and working capital may be required to increase sales, develop new products, services, markets and customers, all of which results in higher profits. As long as these investments generate a higher return than the cost of capital, shareholder value will increase. EVA is a perfect indicator of this value creation. Asset Management Rationalising, liquidating or curtailing investments in operations may be necessary if a business or asset cannot generate returns higher than the cost of capital. Thus, EVA encourages active asset portfolio management. Additionally, working capital management is a means of increasing EVA by optimising inve