EVATraining-EVA最好的培训资料ppt课件

1、Introduction to EVA Management System ContentsWhat is EVA?The calculation of EVAThe EVA management systemContentsWhat is EVA?The calculation of EVAThe EVA management systemEVA is Earnings After the Cost of CapitalRevenues-Operating Costs-Depreciation-/+ Adjustments-Taxes=Operating Income After Tax (

2、NOPAT)Capital x c% Capital Charge=EVAObjective: Continuous Improvement in EVAP/LB/SThe intrinsic value is the determinant of the market value in efficient capital marketIntrinsic valueFinancial measuresOperating metrics MVA, Stock price EVA ROI, Capital turnover, margin Market share, Unit cost, scra

3、p rate, delivery timeCompetitive strategyBusiness modelManagement systemOperating efficiencyMarket valueUS as example50%40%30%20%10%Correlation with stock priceEVA ROE Cash Flow EPS RevenueAs a measure of business intrinsic value, EVA correlates with stock price better than other measuresEVA measure

4、 gives more insights into the businessFrom Enrons 2000 Annual Report (Letter to Shareholders):Enrons performance in 2000 was a success by any measureThe companys net income reached a record in 2000. Enron is laser-focused on earnings per share, and we expect to continue strong earnings performance.(

5、in mil)Net IncEPSEVA(in mil)ContentsWhat is EVA?The calculation of EVAThe EVA management systemFrom the traditional accounting model to the economic model of the firmAccountingFrameworkEVAFrameworkAdjustmentsP&LBalance SheetCash Flow StatementNOPATCapitalEVASeparate financing effects from operating

6、performanceExtend matching of costs with revenue to economic basis Separate operating from non-operatingEliminate book keeping entries/reserves that distort cash flow and reduce objectivitySo as toTo better reflect value creationTo motivate the right value-creating behaviorOptimizing the EVA Measure

7、MaterialityDifference in EVA with or without adjustment Is it material?Set a rule of thumb and use common senseMotivationAdjustment must motivate managers to do the right thingStart with dysfunctional behaviors in standard operating proceduresData AvailabilityCost of collecting information must be r

8、easonableSimplicityEVA is for operating people keep it simpleA fully adjusted EVA is too complicated to use and communicateThe EVA Calculation Precision VariesBasic EVATailored EVATrue EVADisclosed EVAADJUSTMENTSCash toEconomicNon-operatingItemsNon-recurringEventsAccrual toCashAccounting conservatis

9、m treats many investments as current expenses (R&D, significant Marketing/Training - only those specifically relating to a “strategicpurpose) EVA views them as investments in the future Accounting misstates cash flow(Reserves)EVA seeks to emphasize actual cash eventsAccounting distorts ongoing opera

10、ting performance(Restructuring and Asset sales)EVA treatment avoids profit peaks and troughsItems not included in the normal course of business, or not usually managed at unit level (Interest Expense from Debt; Other Financing)In the EVA framework, we must turn the accounting model into an economic

11、model Cost of Debt Cost of Capital ? %+Cost of Equity? %? %The cost of capital comprises both debt & equity costsRisk Free RateEquity Risk PremiumDebt Premium (Credit spread)Cost ofEquity Capital (required return byequity holders)Risk ()Risk-FreeRate RfMarket Risk PremiumMRP(Rm - Rf )Relationship be

12、tween Risk and ReturnMarket Risk = 1Cost of Equity = Rf + (Beta x MRP)A Beta value is required to determine cost of equityIn general, a higher business risk implies higher beta value, hence higher cost of equityTo calculate Beta, a list of peers need to be identified for ClientA peer company is not

13、necessarily a competitor, but rather a company engaged in principally similar business subject to the same underlying economic forces. They may be competitors or companies in similar industries and business environments.Peer comparisons are used to :Derive Betas for the respective business units and

14、 the corporation to facilitate cost of capital (COC) calculations. Non-listed companies, wholly-owned subsidiaries and business units do not have publicly traded shares from which to measure the levered Betas. Where possible, a pure-play analysis of publicly traded peer companies is used to estimate

15、 the unlevered Beta, or BRI. This is then translated into the levered Beta for that company, using the capital structure and the cost of debt.Benchmark EVA performance and identify value drivers.ContentsWhat is EVA?The calculation of EVAThe EVA management systemStrategyFormationGoal SettingPlanning

16、&BudgetingExecutionEvaluationMotivationEVAEVAEVAEVAEVAMotivation Strategy Goal Setting Planning Execution Evaluation & BudgetingValue BasedManagementEVA provides a comprehensive value management framework to translate strategy into actionFrom EVA Goal Setting to ExecutionEPS Consensus EstimatesIndus

17、try Data BenchmarkingInternal forecastsSimulations of past historyClient Strategic Goals Consolidated EVA Growth GoalBusiness Unit EVA Growth GoalsOperating PlansCapital PlansResults/OutlookReportingEVA PlansReasonableness CheckMarket ExpectationsInternal ForecastsAccuracy CheckGoal setting is not a

18、n issue of the right number, but one of alignmentALIGNMENTGoal setting and benchmarkingIn the EVA framework, Market Value can be broken down into Future Growth Value and Current Operations Value CapitalPV of current EVA in perpetuityPV of EVA ImprovementMVA = Present Value of Current EVA + Present V

19、alue of Expected Improvements to Current EVAFuture Growth Value (FGV)CurrentOperationsValue (COV)MarketValueMarket Value Added(MVA)CapitalFuture growth value represents an expectation of increase in EVAMarketValueCurrent OperationsValue(COV)Future Growth Value (FGV)Expected Improvementsin EVAFuture

20、Growth Value represents the premium on the value of current operations (Capital + EVA/c*).The presence of a Future Growth Value, which equals PV of all future EVA improvements, signals the managers that owners/investors expect increases in EVA.Increases in EVA will also drive increases in MVA. As a

21、result Investor Wealth will go up as well.Applying “industry average growth expectations to Clients 1999 EVA, we estimate an FGV of $691mFGV 39%COV 61%1999 Client EVA1999 COV 1,069mFGV ?If we know Clients 1999 COV is $1060m (COV = 1999 capital + 1999 EVA / WACC) then we can calculate FGV based on th

22、e industry average COV:FGV ratio of 69:311999 EVA could be considered an abnormally good year for Client, so applying an average EVA from 97-00 (a lower EVA), the FGV for Client would come out to $319MEstimated FGV(using 1999 EVA)FGV 691mConservativeClients Industry Ratio1999COV 1,069mCAPITAL526mEVA

23、 / C544mEstimated FGV(using avg. 97-00 EVA)FGV 319m97-00COV 493mTaking Clients FGV of $691m, we convert it into implied annual Expected Improvements in EVA (EI) 2000 COV$(18m)FGV$691m20012003200220042005 . 2021Expected Improvement (EI) $26 millionMarket Value$673MAssuming Client were to achieve this

24、 EVA growth over a 10 year period, annual EVA improvements would have to be $26 million a year.FGVEI (for 10 Years)Aggressive$691m$26m per yearConservative$319m$12m per yearTo achieve EIs, management should first understand the current EVA by focusing on return on capitalMarginxTurnover=ROCScenario

25、A20%x0.75=15%Scenario B5%x3.0=15%NOPATCapitalProfitMarginCapitalTurnoverXReturn on CapitalNOPATSalesSalesCapitalXorDissecting the rateof return brings to lightthe trade-offs betweenprofit margin andcapital efficiency.= A company could achieve a 15% return by either: A company can use ROC curves to u

26、nderstand and map out its strategy to improve returnsClient 1999Client 2000Client peers use fundamentally different business strategies to create value in the industryTotal Operation Expense Margin0%20%40%60%80%100%120%BaltransEGLExped.Client 1999Client 2000AirborneAtlasCNFFedexUPSAverage% of SalesN

27、OPAT Margin-5%0%5%10%15%20%25%30%35%BaltransEGLExped.Client 1999Client 2000AirborneAtlasCNFFedexUPSAverage% of SalesVariable Expenses Margin0%10%20%30%40%50%60%70%80%EGLExped.Client 1999Client 2000AirborneAtlasFedexUPSAverage% of SalesFixed Expenses Margin0%10%20%30%40%50%60%70%80%90%EGLExped.Client

28、 1999Client 2000AirborneAtlasFedexUPSAverage% of SalesBenchmarking NOPAT margins give Client a sense of how it falls in terms of operating efficiencyNote: Baltrans and CNF removed from Variable and Fixed Expense drivers analysis due to insufficient dataCapital Charge Margin0%5%10%15%20%25%30%35%40%B

29、altransEGLExped.Client 1999Client 2000AirborneAtlasCNFFedexUPSAverage% of SalesNWC Capital Charge Margin0%1%2%3%4%5%6%7%BaltransEGLExped.Client 1999Client 2000AirborneAtlasCNFFedexUPSAverage% of SalesFixed Assets Charge Margin0%5%10%15%20%25%BaltransEGLExped.Client 1999Client 2000AirborneAtlasCNFFed

30、exUPSAverage% of SalesOther Capital Charge Margin-2%0%2%4%6%8%10%12%BaltransEGLExped.Client 1999Client 2000AirborneAtlasCNFFedexUPSAverage% of SalesCapital benchmarking points to working capital and fixed assets as an opportunity for Client to drive EVA upwards Summary of Benchmarking study 1999 Dat

31、a In Thousands of USD Company / ItemsBaltransEGLExped.Client 1999Client 2000AirborneAtlasCNFFedexUPSAverageBest in ClassSales100%100%100%100%100%100%100%100%100%100%100%100%Var. Exp / Sales97%62%69%34%54%34%11%N/A14%8%17%8%Fixed Exp / SalesN/A16%23%45%45%58%59%94%79%78%74%16%Selling / Sales N/A15%1%

32、1%1%2%0%N/A0%0%1%0%-Operation Expenses / Sales97%92%94%80%101%95%71%94%93%85%88%23%-Tax / Sales0%3%1%1%0%2%12%2%5%4%5%0%+Other Income / Sales2%1%0%0%0%1%15%1%4%-6%3%15%=NOPAT Margin5%5%5%20%-1%4%32%5%7%5%7%NWC Charge / Sales1%1%1%6%6%0%5%0%0%1%1%0%Fixed Assets Charge / Sales1%0%1%2%3%3%21%2%4%5%7%2%

33、Other Assets Charge / Sales0%1%0%-1%3%1%10%2%5%0%4%0%-Capital Charge / Sales3%3%2%8%12%5%36%4%9%6%12%=Net Margin2%2%3%11%-13%-1%-4%1%-2%-1%-5%xSales172,127595,1731,444,57519,53413,4183,140,226637,0815,592,81016,773,47027,052,000=EVA3,25912,63845,4452,240(1,726)(24,340)(22,405)68,874(361,190)(261,400)Looking at best in class Margin and Turnover, we can chart the EVA of Client under different scenarios(B)Achieve Best in Class Turns(D)Achieve Best in Class ROC(A)Achieve Best in Class NOPAT Margin(C)Also Best i