全面的EVA计算手册
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. Decision-making based on EVA 2 II. Decision-making 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……………………………………………………………………………………………………………. 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 company’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 value-oriented incentive compensation schemes. 2 EVA can be integrated in all key processes Typically, companies use a variety of conflicting measures such as earnings growth, earnings per share, return on equity, market share, gross and net 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. [pic] The EVA financial management system supports and motivates value- based decision-making for day-to-day 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 Decision-making 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 value-creating 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. [pic] - 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 inventory levels and managing payables and receivables. - Capital Structure Lenders and shareholders expect different rates of return according to the risk they are taking. Improving EVA by optimising the capital structure is an action that can primarily be taken on the Group and SBU level. Decision-making with EVA 1 How to build up EVA on the operating unit level 1 Overview EVA is a transparent measure that is easy to calculate: [pic] 2 NOPAT (Net operating profit after tax) 1 Introduction NOPAT is the adjusted operating income after standard taxes. If you want to know how to manage operating performance, use NOPAT. It includes standard taxes because they are an important cost factor. Some specific adjustments are incorporated to reflect economic reality better and to motivate correct decision-making. 2 Calculation [pic] The following positions will be adjusted: (For a detailed description of the adjustments and the accounts involved, see Appendix): [pic] - Goodwill amortisation Goodwill amortisation of the period is added back to operating income as from an economic point of view the value of the acquisition reflected in goodwill does not diminish, in contrast to standard accounting treatment. - Results from loans to and shareholdings in non-consolidated and equity companies As operating management is responsible for the performance of investments in and loans to non-consolidated companies, the results from these assets are included in the operating performance measure. - Separation of financing results To exclude any financing costs from NOPAT, some financial charges that are included in operating income (e.g. interest related to pensions, which are part of personnel costs, or interest related to operating leases, which is implicit in the leasing rates) are added back to operating income. Foreign currency results are included in NOPAT (and not in financing costs) as they are regarded as being part of the operating activities. 3 Invested capital 1 Introduction Capital is not free since both lenders and equity investors expect a return on their investments. The concept of EVA is based on a simple rule: A business only creates value if in the long term it earns at least the cost of the invested capital. Invested capital includes all assets that can be attributed to a business minus provisions and liabilities for which no financing costs are charged (e.g. trade payables). 2 Calculation [pic] In addition to tangible and intangible assets, the following positions are included in invested capital (For a detailed description of the adjustments and the accounts involved, see Appendix): - Investments and loans Investments in and financial loans to non-consolidated and equity companies (including cash) are part of the invested capital, as operating management is responsible for the performance of these activities. - Net working capital Net Working Capital consists of inventory and operating receivables less operating liabilities. Efficient management of net working capital reduces invested capital, capital charges and therefore improves EVA. - Provisions Provisions are regarded as non-interest bearing and are therefore deducted from invested capital. Provisions for pensions and provisions for deferred taxes are treated differently and will not be deducted from invested capital. - Adjustments - Goodwill amortisation The full historical goodwill from the time of the acquisition is included in invested capital. Therefore accumulated goodwill amortisation is added back to invested capital. - Rental and leasing contracts The present value of future rental and operating lease contracts is included in invested capital in order to reflect the risk associated with future payment obligations. - Off balance sheet obligations In order to show the true risk associated with off balance sheet obligations, they are included in invested capital. In effect, the capital charges will be reduced by a corresponding item in NOPAT in order to derive an adequate risk premium for those items. - Construction in progress Assets under construction are not included in invested capital because they do not earn operating income. As a general rule, the calculation of capital within the XY Group will be based upon average capital during the year. As of 2002, this average calculation will be based on the quarterly financial statement. 4 Cost of capital Capital is not free, since lenders and shareholders expect a return on their investment. o Lenders require a return on debt in the form of interest payment. o Shareholders expect a return as well. XY will eventually need new equity from the capital market. Only if shareholders anticipate that XY will be able to meet their expectations will they be willing to invest new capital on favourable terms. This expected return on equity can be measured and is part of the cost of capital. In the Weighted Average Cost of Capital (WACC) the cost of debt and the cost of equity are combined, with weights based on the debt/equity ratio. WACC = %debt * Net Cost of Debt + %equity * Cost of Equity Using this approach country-specific WACC’s are calculated. To illustrate the formula the WACC calculation for one country is shown. The cost of debt is 3,9% after-tax. The shareholders expect a return of 10,5%, a higher figure because the risk is higher than for a debt investment. The debt-to-market value (leverage) ratio is 52%: Cost Weight Weighted Cost Debt after tax 3,9% 52% 2,0% Equity 10,5% 48% 5,1% Weighted Average Cost of Capital 7,1% (rounded 7%) You can find the specific WACC of different countries on the Intranet under Group functions/Reporting, Controlling, Investor Relations (RCI)/WACC. 5 Focus on Delta EVA If you have calculated EVA for your business, you may have found out that it is not comparable to other units. This is due to the fact that invested capital is stated at book value, which often does not reflect fair value. Does that mean that EVA does not work? No. As absolute values are sometimes not comparable, we focus on Delta EVA, which reflects the change in EVA from one period to another. EVA is a management tool. It can help managers to evaluate opportunities, set goals, measure results, benchmark performa...
全面的EVA计算手册