Creation of shareholder value; this simple idea has become a principle of corporate governance over the past fifty years (Lazonick et al, 2000). Managers shall maximize the value of their business by efficiently allocating resources and hence increase the wealth of shareholders (Worthington et al, 2001). The operationalization of this objective is done by various indicators. Shareholders, managers and other interested parties strongly follow these in order to assess business and predict future performance. EVA is one of these indicators.
The following paper presents the concept and measurement behind the trademark EVA. It is practically applied for the company Fresenius in a simplified way. Theoretical and practical analyses reveal strengths and weaknesses of measurement and concept. In general it can be said that EVA is one approach to identify value creation and degrading. The concept can be used for investment decisions as well as performance appraisal. Main disadvantage has been identified to be a high degree of complexity in order to derive the true EVA. If adjustments are not made the measurement appears to be similar to other residual income indicators.
List of content
Executive Summary
List of content
List of figures and tables
List of abbreviations
1 Introduction
2 Theoretical conception of EVA
3 Calculation of the measurement
3.1 Rate of return - r
3.2 Cost of capital - WACC and CAPM
3.3 Conversions in the measurement
4 Application of EVA - example Fresenius
4.1 Indicating the critical parameter for Fresenius
4.2 Calculation of the measurement EVA
4.3 EVA compared to other measurements
5 Evaluation of the concept
5.1 Strengths of EVA
5.2 Weaknesses of EVA
6 Summary
List of literature
Appendix
Integral Total Management (ITM)
-
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X.