某公司EVA财务知识手册(英文版).docx

EVAManualGeneralConceptTableofContentsGeneralConceptI. Introduction11. EVAisamanagementtoolthatmeasurestrueeconomicprofit12. EVAcanbeintegratedinallkeyprocesses13. Decision-makingbasedonEVA2II. Decision-makingwithEVA3A. HowtobuildupEVAonoperatingunitlevel31. Overview32. NOPAT(Netoperatingprofitaftertax)33. Investedcapital44. Costofcapital65. FocusonDeltaEVA7B. HowtobuildupEVAontheGroupandSBUlevel8C. UseofEVAintheXYmanagementsystem91. Managementreporting92. Capitalexpenditures103. Portfolioanalysis11DetailsoftheEVACalculationIII. AppendixI. 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,grossandnetmargin,cashflow,NPVandROIC.Usinganumberofdifferentmeasuresleadstoconflictinggoals.ThisiswhywewilluseEVAasasinglemajorperformancemeasure.Incentive SystemOperating DecisionsCapital Budgeting & AcquisitionsStrategic & Operating planningPerformance MeasurementGoal settingTheEVAfinancialmanagementsystemsupportsandmotivatesvalue-baseddecision-makingforday-to-dayoperatingdecisions,budgetingandcapitalplanningandstrategicinitiatives.ByusingEVAforalloftheseprocesses,aswellasforperformancemeasurementandincentives,managersofXYwillfocusonthegoalofcreatingvalue.3. Decision<makingbasedonEVAAlthoughtherearecountlessindividualactivitiespeoplecanpursuetocreatevalue,ultimatelytheyallfallintooneoffourcategories:EVAcanbeincreasedbyenhancingoperatingefficiency(performance"),investinginvalue-creatingprojects("growth")ordivestingcapitalfromunenomicassetsoractivities(uassetmanagement").EVAcanalsobeincreasedbythefinancingstrategyofminimisingthecostofcapitalbyoptimisingthecapitalstructure.NetOperatingrWeightedAverageEVA=ProfitafterTaxes-IInvestedCapitalxCostofCapital(NOPAT)L(WACC)PerformanceImprovingoperatingprofitswithouttyingupmorecapitalinthebusinesswilldirectlyincreaseEVA.GrowthInvestmentsinnewequipmentandworkingcapitalmayberequiredtoincreasesales,developnewproducts,services,marketsandcustomers,allofwhichresultsinhigherprofits.Aslongastheseinvestmentsgenerateahigherreturnthanthecostofcapital,shareholdervaluewillincrease.EVAisaperfectindicatorofthisvaluecreation.AssetManagementRationalising,liquidatingorcurtailinginvestmentsinoperationsmaybenecessaryifabusinessorassetcannotgeneratereturnshigherthanthecostofcapital.Thus,EVAencouragesactiveassetportfoliomanagement.Additionally,workingcapitalmanagementisameansofincreasingEVAbyoptimisinginventorylevelsandmanagingpayablesandreceivables.CapitalStructure1.endersandshareholdersexpectdifferentratesofreturnaccordingtotherisktheyaretaking.ImprovingEVAbyoptimisingthecapitalstructureisanactionthatcanprimarilybetakenontheGroupandSBUlevel.II. Decision-makingwithEVAA. HowtobuildupEVAontheoperatingunitlevel1. OverviewEVAisatransparentmeasurethatiseasytocalculate:IIEVA=NetOperatingProfitAfterTaxes_Capitalcharges(NOPAT)or:1 EVA=Adjustedoperating.TaXeS1-InVeStedXwaccILIncomeJLC叩Ital2. NOPAT(Netoperatingprofitaftertax)a) IntroductionNOPATistheadjustedoperatingincomeafterstandardtaxes.Ifyouwanttoknowhowtomanageoperatingperformance,useNOPAT.Itincludesstandardtaxesbecausetheyareanimportantcostfactor.Somespecificadjustmentsareincorporatedtoreflecteconomicrealitybetterandtomotivatecorrectdecision-making.b) CalculationOperatingIncome+/-EVAadjustments.Standardtaxes=Netoperatingprofitaftertaxes(NOPAT)Thefollowingpositionswillbeadjusted:(Foradetaileddescriptionoftheadjustmentsandtheaccountsinvolved,seeAppendix):+Goodwillamortisation+/-Resultsfromloansandparticipations+/-Separationoffinancingresults=EVAadjustmentsonoperatingincomeGoodwillamortisationGoodwillamortisationoftheperiodisaddedbacktooperatingincomeasfromaneconomicpointofviewthevalueoftheacquisitionreflectedingoodwilldoesnotdiminish,incontrasttostandardaccountingtreatment.Resultsfromloanstoandshareholdingsinnon<consolidatedandequitycompaniesAsoperatingmanagementisresponsiblefortheperformanceofinvestmentsinandloanstonon-consolidatedcompanies,theresultsfromtheseassetsareincludedintheoperatingperformancemeasure.SeparationoffinancingresultsToexcludeanyfinancingcostsfromNOPAT,somefinancialchargesthatareincludedinoperatingincome(e.g.interestrelatedtopensions,whicharepartofpersonnelcosts,orinterestrelatedtooperatingleases,whichisimplicitintheleasingrates)areaddedbacktooperatingincome.ForeigncurrencyresultsareincludedinNOPAT(andnotinfinancingcosts)astheyareregardedasbeingpartoftheoperatingactivities.3. Investedcapitala) IntroductionCapitalisnotfreesincebothlendersandequityinvestorsexpectareturnontheirinvestments.TheconceptofEVAisbasedonasimplerule:Abusinessonlycreatesvalueifinthelongtermitearnsatleastthecostoftheinvestedcapital.Investedcapitalincludesallassetsthatcanbeattributedtoabusinessminusprovisionsandliabilitiesforwhichnofinancingcostsarecharged(e.g.tradepayables).b) Calculation+Tangibleandintangibleassets+Investmentsandloans+/-Networkingcapital-Provisions+/-Adjustments=InvestedcapitalInadditiontotangibleandintangibleassets,thefollowingpositionsareincludedininvestedcapital(Foradetaileddescriptionoftheadjustmentsandtheaccountsinvolved,seeAppendix):InvestmentsandloansInvestmentsinandfinancialloanstonon-consolidatedandequitycompanies(includingcash)arepartoftheinvestedcapital,asoperatingmanagementisresponsiblefortheperformanceoftheseactivities.NetworkingcapitalNetWorkingCapitalconsistsofinventoryandoperatingreceivableslessoperatingliabilities.Efficientmanagementofnetworkingcapitalreducesinvestedcapital,capitalchargesandthereforeimprovesEVA.ProvisionsProvisionsareregardedasnon-interestbearingandarethereforedeductedfrominvestedcapital.Provisionsforpensionsandprovisionsfordeferredtaxesaretreateddifferentlyandwillnotbedeductedfrominvestedcapital.AdjustmentsGoodwillamortisationThefullhistoricalgoodwillfromthetimeoftheacquisitionisincludedininvestedcapital.Thereforeaccumulatedgoodwillamortisationisaddedbacktoinvestedcapital.RentalandleasingcontractsThepresentvalueoffuturerentalandoperatingleasecontractsisincludedininvestedcapitalinordertoreflecttheriskassociatedwithfuturepaymentobligations.OffbalancesheetobligationsInordertoshowthetrueriskassociatedwithoffbalancesheetobligations,theyareincludedininvestedcapital.Ineffect,thecapitalchargeswillbereducedbyacorrespondingiteminNOPATinordertoderiveanadequateriskpremiumforthoseitems.ConstructioninprogressAssetsunderconstructionarenotincludedininvestedcapitalbecausetheydonotearnoperatingincome.Asageneralrule,thecalculationofcapitalwithintheXYGroupwillbebaseduponaveragecapitalduringtheyear.Asof2002,thisaveragecalculationW川bebasedonthequarterlyfinancialstatement.4. Costofcapital Capitalisnotfree,sincelendersandshareholdersexpectareturnontheirinvestment. 1.endersrequireareturnondebtintheformofinterestpayment. Shareholdersexpectareturnaswell.XYwilleventuallyneednewequityfromthecapitalmarket.OnlyifshareholdersanticipatethatXYwillbeabletomeettheirexpectationswilltheybewillingtoinvestnewcapitalonfavourableterms.Thisexpectedreturnonequitycanbemeasuredandispartofthecostofcapital.IntheWeightedAverageCostofCapital(WACC)thecostofdebtandthecostofequityarecombined,withweightsbasedonthedebt/equityratio.WACC=%debt*NetCostofDebt+%equity*CostofEquityUsingthisapproachcountry-specificWACC,sarecalculated.ToillustratetheformulatheWACCcalculationforonecountryisshown.Thecostofdebtis3,9%after-tax.Theshareholdersexpectareturnof10,5%,ahigherfigurebecausetheriskishigherthanforadebtinvestment.Thedebt-to-marketvalue(leverage)ratiois52%:COStWeiahtWeiahtedCOStDebtaftertax3,9%52%Equity10,5%48%2,0%5J%WeightedAverageCostofCapital7,1%(rounded7%)YoucanfindthespecificWACCofdifferentcountriesontheIntranetunderGroupfunctions/Reporting,Controlling,InvestorRelations(RCI)WACC.5. FocusonDeltaEVAIfyouhavecalculatedEVAforyourbusiness,youmayhavefoundoutthatitisnotcomparabletootherunits.Thisisduetothefactthatinvestedcapitalisstatedatbookvalue,whichoftendoesnotreflectfairvalue.DoesthatmeanthatEVAdoesnotwork?No.Asabsolutevaluesaresometimesnotcomparable,wefocusonDeltaEVA,whichreflectsthechangeinEVAfromoneperiodtoanother.EVAisamanagementtool.Itcanhelpmanagerstoevaluateopportunities,setgoals,measureresults,benchmarkperformanceanddeliverincentivecompensation.DeltaEVAisthemeasurebecausemanagementactionshouldalwaysbedirectedtowardsthefuturewhenevaluatingopportunities,anincreaseofEVAgivestherightsignalwhensettinggoals,DeltaEVAgivesappropriateincentiveswhenmeasuringresults,DeltaEVAshowsacomparablefigureThefollowingexamplecomparesthereportingofaunitthatbelongstotheGroupforalongtimetothereportingofarecentlyacquiredunit.BothcompanieshaveaNOPATof120.Duetodepreciation,thebookvalueofassetsofthecompanythathasbeenpartoftheGroupforalongtimeismuchlowerthanthebookvalueofassetsoftherecentlyacquiredcompany.Bothunitsinvestinanewprojectthatisequallyprofitable:HistoricpartofGroupRecentAcquisitionExistingbusinessNewInvestmentTotalExistingbusinessNewInvestmentTotalInvestedcapital4001005001.0001001.100NOPAT1201213212012132Capitalcharge-40-10-50-100-10-110EVA8028220222DeltaEVA22Becauseofdifferentlevelsofinvestedcapital,theEVAoftheexistingcompanyismuchhigherthantheEVAofthenewcompany.TheexampleshowsthatDeltaEVAcorrectlyindicatestheperformanceoftheunitsbecauseitreflectstheprofitabilityofthenewproject.B. HowtobuildupEVAontheGroupandSBUlevelValue-orienteddecisionsaretakenonallcorporatelevels.TheEVAdefinitionappliedontherespectivelevelreflectsmanagers*responsibilities: InvestorRelations Capitalstructure Taxes Majorinvestments/acquisitions GoodwillfromtheacquisitionofcompanyAandcompanyB Operatingmanagement Operatinginvestmentdecisions Responsibilityforinvestedcapital(incl.goodwill)AscomparedtotheEVAdefinitionontheoperatingunitlevel,thefollowingitemsaretreateddifferentlyontheGroupandSBUlevel:-Taxes- GoodwillfromtheacquisitionofAandB- CurrencyTranslationAdjustment(CTA)FordetailsoftheEVAcalculationonthegroupandSBUlevel,seeAppendixB.C.UseofEVAintheXYmanagementsystemFrom2002onwardsalloperatingunitsW川reportEVAonaquarterlybasis.Inthefollowing,examplesforEVAreportingareshown.Pleasebeawarethatthisisnotthefinaldesign,butgivesyouanimpressionoftheanalyticalfeaturesofthetool.1. ManagementreportingThefollowingexampleshowstheEVAanalysisforanoperatingunit:Ow 2-qOsA<5utang.lntang.Assets-s一 de。p- s>wsOS-SA-BUVExample20002001DeltaOperating Income1.0001.300300EVA Adjustments*29031323-Taxes-490-613-123Net operating income after taxes8001.000200Capital charge (WACC 7%)-770-1.120-350EVA30-120-150Delta EVA non-operating-30Delta EVA-180Invested CapitalTangibIeZintangibIe assets after adj.10.00012.3002.300Financial loans1001000Investments5002.0001.500Net working capital9002.0001.100Provisions500-400100Total11.00016.0005.000*mainly due to add back of goodwill amortisationThefollowingconclusionscanbederivedfromthisexample:- Operatingincomeincreasedby300or30%.Detailedanalysisisprovidedintheincomestatementandthevarianceanalysis.- TheincreaseincapitalchargesoutweighedthepositivedevelopmentofNOPAT.- Analysisofthechangesininvestedcapitalshowsthattheincreaseinthecapitalchargeisduetothefollowingfactors:- Thebookvalueoftangibleassetsincreased,whichmeansthattheinvestmentsofthecompanywerehigherthanthedepreciation,andthecompanycouldnotimproveitsoperatingincometothesameextent.- Non-consolidatedinvestmentsincreasedby1.500anddidnotearnthecostofcapital- Networkingcapitalincreased.Thepaymenttimeforaccountsreceivableincreased,whilethetimeinwhichthecompanypaiditscreditorsdecreased.- Additionally,DeltaEVAwasreducedbynon-operatingorexceptionallosseswhichresultedinaDeltaEVAnon-operatingof-30(Fordetailsoftheadjustmentforunusualitems,seeAppendixchap.4).2. CapitalexpendituresTheEVAsystemalsosupportsdecisionsoncapitalexpenditures.Decisionsoninvestmentswillbebasedonthefollowingrule:AninvestmentshouldonlybemadeifthepresentvalueoffutureEVA'sispositive.Essentially,theEVAinvestmentmodelprovidesthesameresultasaFreeCashFlowanalysis.ThepresentvalueofEVAequalsthenetpresentvalueofcashflows.EVAhastheadvantagethatithasamemoryfortheinvestedcapitalandcanbeusedforperformancemeasurementpurposesaswellasforinvestmentdecisions.IncontrasttotheFreeCashFlowmethod,theEVAsystemallowsanintegratedapproachwherebythecapitalexpenditureanalysisshowsannualcontributionsthatwillbemanagedviatheEVAmanagementsystem.ThefollowingexampleshowsanEVAbasedinvestmentanalysis:YOY1Y2Y3Y4丫5OperatingProfit0100200200200200Capital(BeginningofY)01.5001.200900600300-CaDNalCharQe(10%)0150120906030=EVA0-5080110140170xDisc.Fac.(10%)1.000,910.830.750.680.62=PresentValueEVA0-45668395106EVA304Intheexample,aninvestmentof1.500ismadeattheendofyear0(correspondingtothebeginningofyear1).Startingfromyear1,theinvestmentcreatesoperatingprofit.Thebookvalueoftheinvestmentisdepreciatedoverfiveyearswiththebookvalueatthebeginningofeachperiodbeingthebasisforcalculatingthecapitalcharge.ThefactthatthepresentvalueofEVAispositiveindicatesthattheprojectiscreatingvalue.3. PortfolioanalysisThecompanyactivelymanagesitsportfolioandwillneedtotakestrategicdecisions.Thesedecisionsincludebothinvestmentanddivestmentalternatives.Asdiscussedabove,itisoftennotpossibletocompareabsoluteEVA,sbecausethecapitalchargeisbasedonbookvalueandnotonfairvalue.ForactiveportfoliomanagementitisnecessarytoanalysethechangesinEVAduetodifferentfuturescenarios.ThestrategywiththehighestincreaseinDeltaEVAwillbechosen.Inthefollowingexample,threestrategicalternativesarebeingdiscussed:-Sellpartofthebusiness(alternative1)Increaseinvestmentinthebusiness(alternative2)Divestthewholebusiness(alternative3)Current1Alternative23NOPAT100701500Inves