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文献、资料中文题目：一个较好的财务绩效评价方法文献、资料英文题目：A better financial reporting tool
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翻译日期: 2017. 02. 14
中文3487字
本科毕业论文（设计）
外文翻译
原文：
EVA: A better financial reporting tool
pkrEconomic Value Added (EVA) 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 bad on the concept of true economic income which includes the cost of capital for all types of financing. EVA provides a more comprehensive measure of profitability than traditional measures becau it indicates how well a firm has performed in relation to the amount of capital employed. This article summarizes the EVA concept of measuring profitability, the EVA calculation and the benefits of adopting an EVA framework.
The EVA Concept of Profitability
EVA is bad 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 incread shareholder value.
In its simplest form，EVA can be expresd as the following equation:
EVA = Operating Profit After Tax (NOPAT) - Cost of Capital
翻译润色
NOPAT is calculated as net operating income after depreciation, adjusted for items that move the profit measure clor to an economic measure of profitability. Adjustments include such items as: additions for interest expen after-taxes (including any implied interest expen on operating leas); increas in net capitalized R&D expens; increas in the LIFO rerve; and goodwill amortization. Adjustments made to operating earnings for the items reflect the investments made by the firm or capital employed to achieve tho 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 EVA.[ 1 ]
Measurement of EVA
Measurement of EVA can be made using either an operating or financing approach. Under the operating approach，NOPAT is derived by deducting cash operating expens and depreciation from sales. Interest expen is excluded becau 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-bad value. The adjustments are considered with cash taxes deducted to arrive at NOPAT.
EVA is then measured by deducting the company’s cost of capital from the NOPAT value. The amount of capital to be ud in the EVA calculations is the same under either the operating or financing approach, but is calculated differently.englishtown
The operating approach starts with asts 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， bad on the relative values of debt and equity and their respective cost rates，is ud 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 EVA.免费日语
The remainder of this article summarizes the financing approach becau it emphasizes the significance of capital employed and illustrates how accounting rules impact the calculation of EVA. Exhibit 1 on page 33 shows a sample calculation of EVA.
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EVA Calculation and Adjustments
under怎么读As stated above，EVA is me asured as NOPAT less a firm’s cost of capital. NOPAT is obtained by adding interest expen after tax back to net income after-taxes， becau interest is considered a capital charge for EVA. Interest expen 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 leas rather than financing leas are employed, interest expen is not recorded on the income statement，nor is a liability for future lea payments recognized on the balance sheet. Thus, while interest is implicit in the yearly lea payments, an attempt is not made to distinguish it as a financing activity under GAAP.
Under EVA, however，the interest portion of the payment is estimated and the after-tax amount from
it is added back into NOPAT becau the interest amount is considered a capital charge rather than an operating expen. The corresponding prent value of future lea payments reprents equity equivalents for purpos of capital employed by the firm, and an adjustment for capital is also required. See Exhibit 1 for sample adjustments commonly ud in the calculation of EVA.
R&D expen items call for careful evaluation and adjustment. While GAAP generally requires most R&D expenditures to be expend immediately, EVA capitalizes successful R&D efforts and amortizes the amount over the period benefiting the successful R&D effort.
Another example of an EVA adjustment is the LIFO rerve increa. The increa is added back to profit becau it converts inventory from a LIFO to FIFO valuation，which is a better approximation of current replacement cost. The full amount of the LIFO rerve reprents 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 be
cau 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 asts regardless of the manner in which the acquisition is accounted. While the above adjustments are common in EVA calculations, according to Stern Stewart, tho items
to be considered for adjustment should be bad on the following criteria: Materiality: Adjustments should make a material difference in EVA.
eminem新专辑Manageability: Adjustments should impact future decisions.
Definitiveness: Adjustments should be definitive and objectively determined.
Simplicity: Adjustments should not be too complex.
elfIf an item meets all four of the criteria，it should be considered for adjustment. For example, the impact on EVA is usually minimal for firms having small amounts of operating leas. Under the conditions，it would be reasonable to ignore this item in the calculation of EVA. Furthermore, adjustments for items such as deferred taxes and various types of rerves (i.e. warranty expen，etc.) would be typical in the calculation of EVA, although the materiality for the items should be co
nsidered. Unusual gains or loss should also be examined and eliminated if appropriate. This last item is particularly important as it relates to EVA-bad compensation plans.
The Significance of the Capital Charge
Under traditional financial reporting, a cost rate is not assigned for the equity ud to finance operations. Thus, the u of net income as a performance measure is limited by the exclusion of that cost. In addition, when ud in calculations such as return on equity，net income also includes the accounting distortions included in its calculation and that of book value.
景点英文EVA, on the other hand, through its adjustment efforts, eks 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 EVA than that provided by the u of traditional GAAP-bad measures. This may be significant becau some companies spend heavily on R&D and the accounting treatment for this and certain in tangibles is not included on GAAP-bad balance sheets. EVA provides a way to compare performance among firms impacted by the accounting weakness.
The specific amount of the capital charge for EVA is bad on the amount of equity equivalents deter
mined after adjustments，multiplied by the capital cost rate. The
