Description
Book SynopsisBest-Practice EVA tells the new EVA story from the ground up. Stewart covers EVA essentialsthe classic economic profit version of EVAin the first three chapters of the book. He shows readers how simple and intuitive EVA really is, how it is defined, and why it is better than all other measures of corporate profit. You discover how it naturally guides managers into making all the right decisionsthe ones that will truly maximize value. You see how to use it in profit-sharing bonus plans that create the powerful incentives of an owner. Later, Stewart introduces new ratios that make EVA much more powerful and much easier to use than ever before. The pinnacle of the new ratio framework is EVA Momentum, calculated by taking the change in EVA versus the prior period, and dividing by the revenues in the prior period. It measures the growth rate in EVA, scaled to the sales size of the business. It is the only corporate performance ratio where bigger always is better, because it gets bigge
Table of Contents
Preface ix
Chapter 1 EVA 101 1
Chapter 2 EVA and Value 19
Chapter 3 Accounting for Value 47
Chapter 4 What’s Wrong with RONA? 85
Chapter 5 The New EVA Ratio Metrics 99
Chapter 6 EVA Margin 123
Chapter 7 Setting EVA Targets 157
Chapter 8 Put Momentum into Planning 191
Chapter 9 Dividing Multiples into Good and Bad 217
Chapter 10 Put EVA into Capital Decisions and Acquisitions 223
Chapter 11 EVA and the Buy Side 245
Chapter 12 Become a Best-Practice EVA Company 273
APPENDIX A The Best-Practice EVA Software Toolkit 287
APPENDIX B Corrective Accounting Adjustments 291
APPENDIX C Accounting for Corporate Charges in Detail 295
Glossary 299
About the Author 313
Index 315
