经济附加值(EVA)外文文献翻译-会计演示教学

中文3487字本科毕业论文（设计）外文翻译原文：EV A: A better financial reporting toolEconomic Value Added (EV A) is a financial performance measure being adopted by many companies in corporate America. This new metric, trademarked by Stern Stewart and Company, is a profit measure based on the concept of true economic income which includes the cost of capital for all types of financing. EV A provides a more comprehensive measure of profitability than traditional measures because it indicates how well a firm has performed in relation to the amount of capital employed. This article summarizes the EV A concept of measuring profitability, the EV A calculation and the benefits of adopting an EV A framework.The EV A Concept of ProfitabilityEV A is based on the concept that a successful firm should earn at least its cost of capital. Firms that earn higher returns than financing costs benefit shareholders and account for increased shareholder value.In its simplest form, EV A can be expressed as the following equation:EV A = Operating Profit After Tax (NOPAT) - Cost of CapitalNOPAT is calculated as net operating income after depreciation, adjusted for items that move the profit measure closer to an economic measure of profitability. Adjustments include such items as: additions for interest expense after-taxes (including any implied interest expense on operating leases); increases in net capitalized R&D expenses; increases in the LIFO reserve; and goodwill amortization. Adjustments made to operating earnings for these items reflect the investments made by the firm or capital employed to achieve those profits. Stern Stewart has identified as many as 164 items for potential adjustment, but often only a few adjustments arenecessary to provide a good measure of EV A.[1]Measurement of EV AMeasurement of EV A can be made using either an operating or financing approach. Under the operating approach, NOPAT is derived by deducting cash operating expenses and depreciation from sales. Interest expense is excluded because it is considered as a financing charge. Adjustments, which are referred to as equity equivalent adjustments, are designed to reflect economic reality and move income and capital to a more economically-based value. These adjustments are considered with cash taxes deducted to arrive at NOPAT.EV A is then measured by deducting the company's cost of capital from the NOPAT value. The amount of capital to be used in the EV A calculations is the same under either the operating or financing approach, but is calculated differently.The operating approach starts with assets and builds up to invested capital, including adjustments for economically derived equity equivalent values. The financing approach, on the other hand, starts with debt and adds all equity and equity equivalents to arrive at invested capital. Finally, the weighted average cost of capital, based on the relative values of debt and equity and their respective cost rates, is used to arrive at the cost of capital which is multiplied by the capital employed and deducted from the NOPAT value. The resulting amount is the current period's EV A.The remainder of this article summarizes the financing approach because it emphasizes the significance of capital employed and illustrates how accounting rules impact the calculation of EV A. Exhibit 1 on page 33 shows a sample calculation of EV A.EV A Calculation and AdjustmentsAs stated above, EV A is measured as NOPAT less a firm's cost of capital. NOPAT is obtained by adding interest expense after tax back to net income after-taxes, because interest is considered a capital charge for EV A. Interest expense will be included as part of capital charges in the after-tax cost of debt calculation.Other items that may require adjustment depend on company-specific activities. For example, when operating leases rather than financing leases are employed,interest expense is not recorded on the income statement, nor is a liability for future lease payments recognized on the balance sheet. Thus, while interest is implicit in the yearly lease payments, an attempt is not made to distinguish it as a financing activity under GAAP.Under EV A, however, the interest portion of the payment is estimated and the after-tax amount from it is added back into NOPAT because the interest amount is considered a capital charge rather than an operating expense. The corresponding present value of future lease payments represents equity equivalents for purposes of capital employed by the firm, and an adjustment for capital is also required. See Exhibit 1 for sample adjustments commonly used in the calculation of EV A.R&D expense items call for careful evaluation and adjustment. While GAAP generally requires most R&D expenditures to be expensed immediately, EV A capitalizes successful R&D efforts and amortizes the amount over the period benefiting the successful R&D effort.Another example of an EV A adjustment is the LIFO reserve increase. The increase is added back to profit because it converts inventory from a LIFO to FIFO valuation, which is a better approximation of current replacement cost. The full amount of the LIFO reserve represents past holding gains and accordingly is added back to the equity component to reflect the capital invested by the firm in inventory not yet reflected in equity under GAAP.Other adjustments recommended by Stern Stewart include the amortization of goodwill. The annual amortization is added back for earnings measurement, while the accumulated amount of amortization is added back to equity equivalents. Goodwill amortization is handled in this manner because by "un-amortizing" goodwill, the rate of return reflects the true cash-on-yield. In addition, the decision to include the accumulated goodwill in capital improves the real cost of acquiring another firm's assets regardless of the manner in which the acquisition is accounted. While the above adjustments are common in EV A calculations, according to Stern Stewart, those items to be considered for adjustment should be based on the following criteria: Materiality: Adjustments should make a material difference in EV A.Manageability: Adjustments should impact future decisions.Definitiveness: Adjustments should be definitive and objectively determined.Simplicity: Adjustments should not be too complex.If an item meets all four of the criteria, it should be considered for adjustment. For example, the impact on EV A is usually minimal for firms having small amounts of operating leases. Under these conditions, it would be reasonable to ignore this item in the calculation of EV A. Furthermore, adjustments for items such as deferred taxes and various types of reserves (i.e. warranty expense, etc.) would be typical in the calculation of EV A, although the materiality for these items should be considered. Unusual gains or losses should also be examined and eliminated if appropriate. This last item is particularly important as it relates to EV A-based compensation plans.The Significance of the Capital ChargeUnder traditional financial reporting, a cost rate is not assigned for the equity used to finance operations. Thus, the use of net income as a performance measure is limited by the exclusion of that cost. In addition, when used in calculations such as return on equity, net income also includes the accounting distortions included in its calculation and that of book value.EV A, on the other hand, through its adjustment efforts, seeks to eliminate the impact of accounting distortions while treating the impact of financing costs more comprehensively in its capital cost charge. Therefore, a truer measure of economic profit is provided by EV A than that provided by the use of traditional GAAP-based measures. This may be significant because some companies spend heavily on R&D and the accounting treatment for this and certain in tangibles is not included on GAAP-based balance sheets. EV A provides a way to compare performance among firms impacted by these accounting weaknesses.The specific amount of the capital charge for EV A is based on the amount of equity equivalents determined after adjustments, multiplied by the capital cost rate. The capital cost rate is based on the individual cost rates for both debt and equity. While the cost rate for debt can be readily determined, the rate for equity requires some effort. The cost for equity can be measured by using the capital asset pricingmodel, or other risk premium approaches.Once that rate is determined, it is combined with the relative proportions of capital to produce the weighted average cost of capital (WACC). It is that overall rate, when combined with all capital including equity equivalents, that produces the overall capital charge used in EV A. After the capital charge is calculated and deducted from NOPAT, the full extent of EV A' s benefits can be observed, because all opportunity costs involved in the production of income have been measured and included in profitability. An example of the WACC is shown in Exhibit 1.EV A-Based Compensation PlansFor firms that reward managers based on performance, EV A can offer advantages over traditional profit-based plans. First, by tying compensation to a better performance metric, the company can achieve a better matching of its own objectives with those of the manager. Second, EV A can help reduce some conflicts of interest often associated with managers and profitability measurement. Because an objective of EV A is to eliminate the impact of accounting distortions on profitability and the influence of management in its calculation, EV A is a better representation upon which to reward executives.It should be noted that EV A measurement is not without subjective elements. It may be necessary to involve an independent committee to determine the appropriateness of specific EV A adjustments and how to best handle unusual situations. Stern Stewart also recommends that EV A-based bonus systems involve some form of deferral of pay with the full amount of EV A bonuses dependent on long-term success.This feature of paying only a portion of the current amount and banking the remainder for the future is an important component of the system and is designed to enhance long-term loyalty to the firm. Bonuses should also be uncapped and include stock options, thereby turning managers into owners. The ability of the system to lower bonuses based on subsequent performance is one feature that makes EV A systems fair to both the company and its managers. Thus, EV A and its inclusion in compensation, rewards long-term success and helps the company promote this aspectof corporate performance.The overall success of the plan is dependent on several important factors including the ability of all employees to understand and agree with its goals. To reach this objective, it is necessary to provide focused training of EV A to all employees in the company. In that way, everyone better understands the philosophy and their role in the system. While this training may take considerable time and effort, it is usually rewarded by sustained improvements in EV A.EV A DriversAnother advantage of EV A systems is the emphasis on EV A drivers and the contribution of certain activities to EV A. When implementing EV A, firms seek to determine those areas of the business most responsible for success. By isolating activities, such as inventory management or capacity utilization, firms can judge the value of these on projects, divisions, etc. Thus management can focus on ways to increase economic value, rather than on reported numbers alone. By including capital contributions which do not require a stock price, firms are also able to use EV A in evaluating the performance of individual units or divisions of the firm as well as the managers who run those businesses. EV A helps focus on improving operating profits without tying up more capital in the business, curtailing or liquidating investments that do not meet capital costs, and/or reducing the cost of capital. Management actions such as cost reductions, improvements in technology, reduced working capital, or the optimal use of debt, represent the types of benefits resulting from EV A analysis and implementation.Share Price and EV AA controversy that surrounds EV A is whether it correlates well with a firm's stock prices as claimed by Stern Stewart. While many believe that it does, the results of several studies are mixed.[3] Nevertheless, many seem convinced of the overall benefit of EV A. Therefore, firms contemplating the adoption of EV A, or any performance-based measure used for decision making and compensation, should examine their own individual characteristics, the underlying theory of the measure sought, and the likelihood that the measure selected will capture the attributes it seeks.For advocates of EV A, the underlying theory of finance embedded in its calculation is one of its strengths. This can more easily be seen when one considers that the present value of EV A parallels that of using net present value, and for capital projects, would be expected to yield a similar result.Source: Larry M.Prober,2000 “EV A: A better financial reporting tool”. Pennsylvania CPA Journal, vol.71, lessue 3,p27.译文：EV A：一个较好的财务绩效评价方法经济增加值（EV A）作为财务绩效评价的一种方法，目前正被很多美国公司所应用。