Decomposition of EVA Equity to the Sub-operational Plans of a Company

Zuzana Rowland

Littera Scripta, 2016, vol. 9, issue 3

Abstract: The world is beginning to recognize the need, accuracy and persuasiveness of measuring business performance. Economists are continuously searching for the appropriate tool with which companies can plan, manage and control their business processes and which takes into account current market expectations and requirements. Economic Value Added (EVA) is one of the most important evaluation indicators. This contribution describes the basic characteristics of this indicator and puts forward several options for the calculation of EVA. The options are based on either the accounting (or operative) approach or the financial (or current value) approach, and specifically concerns the calculations of EVA Equity and EVA Entity. The source of the data for the calculations are the annual reports of a transport company for the years 2003-2009. To fulfil the aim of this article, the calculation of EVA Equity is based on the process identified by Neumaierova and Neumaier, and the decomposition of EVA Equity is determined according to the methodology prescribed by the Ministry of Industry and Trade of the Czech Republic. This contribution seeks to decompose EVA Equity, which is viewed as the strategical goal of a company, into partial indicators that can be incorporated into a company´s tactical plan in the form of operative plan indicators.

Keywords: EVA Equity; decomposition; business success; strategic goal; suboperational plans (search for similar items in EconPapers)
Date: 2016
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