wwEVAManualGeneralConceptTableofContentsGeneralConceptI.Introduction................................................................................................................................................11.EVAisamanagementtoolthatmeasurestrueeconomicprofit.........................................................12.EVAcanbeintegratedinallkeyprocesses.......................................................................................13.Decision-makingbasedonEVA.........................................................................................................2II.Decision-makingwithEVA........................................................................................................................3A.HowtobuildupEVAonoperatingunitlevel..........................................................................................31.Overview............................................................................................................................................32.NOPAT(Netoperatingprofitaftertax)...............................................................................................33.Investedcapital..................................................................................................................................44.Costofcapital.....................................................................................................................................65.FocusonDeltaEVA...........................................................................................................................7B.HowtobuildupEVAontheGroupandSBUlevel.................................................................................8C.UseofEVAintheXYmanagementsystem...........................................................................................91.Managementreporting.......................................................................................................................92.Capitalexpenditures.........................................................................................................................103.Portfolioanalysis..............................................................................................................................11DetailsoftheEVACalculationIII.Appendix…………………………………………………………………………………………………………….I.Introduction1.EVAisamanagementtoolthatmeasurestrueeconomicprofitAllmanagersofXYshouldfocusonimprovingtheGroup’soverallvalue.WithEVA,forthefirsttime,thereisatoolthatreflectsnotonlytheoperatingperformance,butalsotheexpectedreturnontheinvestedcapitalofXY.TheEVAsystemencouragesmanagerstothinkandactlikeowners,treatingthecompany’sresourcesasiftheyweretheirown.EVAreflectsnotonlyoperatingprofitaftertaxes,butalsotakesintoaccountcostsfordebtandequitycapital.Creatingshareholdervaluemaybeachievedbyimprovingperformance,growth,portfoliomanagementandoptimisationofcapitalstructure.EVAprovidesatoolforalloftheseaspects.EVAisamanagementtool.Ithelpsmanagerstoevaluateopportunities,setgoals,measureresults,andbenchmarkperformance.EVAisalsoanaccuratebasisforvalue-orientedincentivecompensationschemes.2.EVAcanbeintegratedinallkeyprocessesTypically,companiesuseavarietyofconflictingmeasuressuchasearningsgrowth,earningspershare,returnonequity,marketshare,grossandnetma...
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