經(jīng)濟(jì)增加值外文文獻(xiàn)翻譯譯文-在線瀏覽
2024-09-19 14:07本頁面
【正文】 ered the approach of many corporate leaders. EVA approaches the financial aspect of corporations from a different perspective than that to which most executives are accustomed. To raise awareness of the benefits of EVA, it is imperative to gain a basic understanding of the ideas, concepts, and implications associated with the implementation of policies at corporations that have adopted EVA.EVA Equation At its core, the concept of Economic Value Added is relatively simple. The plexity is that the concept must be applied to every business decision at all levels of a particular pany to realize the desired longrun effects (Stewart, 1991). The equation for EVA is as follows:EVA = Net Operating Profit After Taxes (NOPAT) – (Capital*The Cost of Capital) . This idea helps managers integrate two basic principles of finance into their daily decisionmaking. First, the primary financial objective of all panies should be to maximize shareholder wealth. Second, the value of a pany is based on investors’ expectations of future earnings exceeding or falling short of the cost of capital. The cost of capital is a decisive measure pertaining to puting EVA (Stewart, 1991). The cost of capital is the rate of return a pany would expect to receive had they invested in a different venue with a similar risk (Cost of Capital). This amount is the figure that determines whether a corporation is performing well or badly. Although it may appear to be a cash cost, it is actually an opportunity cost. Calculating the tradeoff between risk and reward derives an opportunity cost. The cost of capital consists of a risk free rate of return and a risk premium. Longterm . government bonds are considered risk free because of the value of the entire economy as well as the taxing authority of the government. To illustrate, assume the rate for risk free government bonds is 6% and add to it the risk premium. Although, risk premiums vary by pany and industry, most investors expect from 2% to 10% in addition to the government bond rate. Assume that the risk premium is 4%, add the risk free rate of 6%, and the cost of capital in this example would be 10%.The Success of EVA To quantify the extent to which panies that implement EVA outperform their petitors, data were collected by Stern Stewart (2002b). Companies have seen high returns when they utilize Stern Stewart39。s EVA framework for performance management, valuebased planning and incentive pensation. Throughout the 1990s these same panies, on average, outperformed their petitors by % annually during the first five years after they first adopted EVA. Improved operating margins, stronger cash flow generation, and quicker asset turnover were the catalysts responsible for greater stock market performance, which caused a $116 billion increase in shareholder wealth beyond that of their margin of performance is greater still for panies that use EVA as a performance measure and a tool for determining management pensation. Companies that only used EVA as a performance measure did not obtain such impressive results (Stewart, 2002b). EVA vs. Other Financial Performance MeasurementsThose in favor of using EVA as a performance measure argue that it is superior to other performance measures for the four following reasons: it is nearer to the real cash fl
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