财务专业经济增加值EVA财务绩效评价资料外文翻译文献

财务专业经济增加值EVA财务绩效评价资料外文翻译文献

原文：

EV A: A better financial reporting tool

Economic 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 Profitability

EV 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 Capital

NOPAT 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 are necessary to provide a good measure of EV A.[1]

Measurement of EV A

Measurement 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 Adjustments

As 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,