ECONOMIC VALUE ADDED- MEASURE FOR VALUE ACHIEVEMENT (ENTERPRISE’S PERFORMANCE)

Summary: The monitoring and communication indicators of the enterprise’s performance have an important role in the successful implementation of the system of management of value. The new indicators of the management orientated towards value achievement (towards the increase of the shareholders ’ wealth and the enterprise’s value and performance) are generally characterized by the difference between the economic result obtained through the running activity of the enterprise (running clear profit or running cash-flow) and the cost of the total used capital. Key words: Economic Value Added, invested capital, capital cost The management of value is a new method within the financial management, focused on value achievement, by obtaining greater performances than the cost of the attracted capitals. The monitoring and communication indicators of the enterprise’s performance have an important role in the successful implementation of the system of management of value. The new indicators of the management orientated towards value achievement (towards the increase of the shareholders ’ wealth and the enterprise’s value and performance) are generally characterized by the difference between the economic result obtained through the running activity of the enterprise (running clear profit or running cash-flow) and the cost of the total used capital. The usage of these indicators requires as a consequence to this, relatively high costs of implementation but facilitates at the same time the adoption of some tactical and strategic decisions that would lead to getting superior benefits to the cost of the used capital. The modern indicator of the enterprise’s performance and the economic value added clarify some important conceptual adjustments, both in calculating the economic result and especially in grounding the capital base. The economic value added is determined: EVA = The running clear profit – (CI x The average balanced cost of the capital), where CI = the invested capital, or EVA = (The rate of investment profitability – the capital cost) x CI The rate of investment profitability