scholarly journals PROBLEMS AND PERSPECTIVES OF THE APPLICATION OF ECONOMIC VALUE ADDED INDICATOR IN VALUE-BASED MANAGEMENT OF ENTERPRISES

2017 ◽  
pp. 190-198 ◽  
Author(s):  
Oleksandr Davydov
Keyword(s):  
Systems Approach ◽  
Economic Value ◽  
Value Added ◽  
Economic Value Added ◽  
Management Activity ◽  
Value Based Management ◽  
Management Measures ◽  
Analysis And Synthesis ◽  
The Subject ◽  
Adequate Measurement

The subject of the study is methodology for assessing the economic value added of enterprises for the purposes of value-based management at the microeconomic level. The purpose of the study is to determine the problems and perspectives of applying the indicator of economic value added in value-based management of enterprises on the basis of the essence and peculiarities of the calculation of economic value added, analysis of the degree of integriration of its indicator into the management system using the criterion of maximizing the value of enterprises at the micro level of the economy nowadays. Research methods. The methods of analysis and synthesis, induction and deduction, systems approach, comparative analysis have been used in the research. The results of the research. The genesis of the economic value added index and its difference from the classical measures of profitability of enterprises have been investigated in this article. The essence of economic value added and peculiarities of its definition have been described. The areas of possible application of the indicator of economic value added in the process of assessing the efficiency of enterprises have been defined. The indicative functions of the economic value added indicator in the management activity from the standpoint of the assessment of the degree of efficiency of the use of the capital and dynamics of the value of enterprises have been determined. The way of behavior of the owners of enterprises depending on the variants of values of the indicator of economic value added has been considered. The basic ways of increasing economic value added and management measures on their realization have been singled out. The drawbacks of the use of the indicator of economic value added in value-based management of enterprises have been detercted. The proposals for the improvement of the economic value added as a tool for value-based management of enterprises have been given. The scope of the research results is the development of the method of adequate measurement of economic value added in the process of implementing the concept of value-based management of enterprises. Conclusion. The results of the study show the necessity to improve the economic value added with the help of reflecting the benefits of all key company stakeholders, while taking into account fundamental effects of its performance in the current economic environment.

scholarly journals Association between values of the Index IN 99 and the EVA indicator

2011 ◽  
Vol 59 (2) ◽  
pp. 25-34
Author(s):  
Michaela Beranová ◽  
Marcela Basovníková ◽  
Dana Martinovičová
Keyword(s):  
Pearson Correlation ◽  
Statistical Significance ◽  
Economic Value ◽  
Value Added ◽  
Economic Value Added ◽  
Financial Health ◽  
Value Based Management ◽  
Business Entities ◽  
Good Differentiation ◽  
The One

The modern indicators of the performance of business entity are based on an economic conception of profit. It means that alternative costs and risks are taken into account in construction of these indicators. Moreover, the modern indicators would also enable to clearly and digestedly identify the links on each level of management, and therefore to support the value-based management. The one of these modern indicators is Economic Value Added. This indicator has been introduced by Stewart Stern & Co. in the early nineties. As some Czech authors state (e.g. Synek, 2007), domestic alternative of the EVA indicator are the IN indexes which has been developing since the middle of the nineties as overall indexes of company’s financial health especially because the indexes coming from abroad had not a good differentiation ability with regard to specifics of the Czech economic environment. The objective of this article is to define the relations between the values of EVA indicator and the values of the index IN 99 while the analysis is focused on agricultural companies of mixed farming. The authors base their work on differences in constructions of these two indicators and on ­differences in interpretations of their results. Primarily, basic correlation of values of these indicators has been observed. The calculation of Pearson correlation coefficient has been applied on the set of fifty business entities, and the calculated result of 0.669 shows relatively stronger linear dependence. Consequent test has verified a statistical significance of this dependence. Then in this article, the authors are focused on causations of this dependence which is rather strong in spite of a different logic of these two indicators. Other consequences of overall view on company’s economic performance are discussed in the article as well.

scholarly journals VALUE BASED MANAGEMENT AT SIEMENS – THE CLASSIC EXAMPLE REMAINS

2020 ◽  
Vol 10 (2) ◽  
pp. 32-50
Author(s):  
Diana Claudia Cozmiuc ◽  
◽  
Ioan Petrișor ◽  
Keyword(s):  
Value Creation ◽  
Economic Value ◽  
Large Body ◽  
Value Added ◽  
Theory And Practice ◽  
Economic Value Added ◽  
Value Drivers ◽  
Business Context ◽  
Value Based Management

The main objective of this paper is to check if value-based management in its classic design, 1980-2000, still works in the practice of one of its most prominent cases, Siemens. The paper also aims to describe value-based management in Siemens’ practice 1998-2020. This should enable a comparison between theory and practice the paper targets. The research methodology is case study: literature review, empirical data analysis, conclusions based on comparison. The case study is exploratory and descriptive. The article relies on secondary evidence about Siemens during 1998-2020, selects the evidence that pertains to value-based management and constructs the Siemens case example. The article is based on a large body of evidence, where the statements about value-based management are chosen based on their relationship to key words such as value, value drivers, value creation. The results may be the confirmation or denial of classic value-based management. The conclusion is that managing for Economic Value Added still works in the current business context. Other findings are Siemens’ driver tree during 1998-2020 in thorough description.

Empirical Evidences of Value Creation from Banking Industry of India

2017 ◽  
Vol 8 (3) ◽  
pp. 45
Author(s):  
Arvind Kumar Banger ◽  
S. K. Sharma ◽  
Rahul Chaudhary
Keyword(s):  
Value Creation ◽  
Financial Management ◽  
Banking Industry ◽  
Economic Value ◽  
Value Added ◽  
Market Value ◽  
Economic Value Added ◽  
Value Based Management ◽  
Significant Difference ◽  
Market Value Added

In wake of recent economic reforms in India with an aim of stabilizing the economy of India under the era of globalisation, banking industry has experienced a canonical shift in terms of value creation practices, methods and metrics for measuring bank’s performance. Value based management has long been hailed as the major objective of financial management of banks. A new trajectory of value based performance evaluation metrics have evolved and became an imperative of evaluating the performance of banks. The present study has been undertaken with the objective to measure the performance and value creation in the selected banks. The selected sample was taken from the public and private sector banks listed on stock exchange in India. In this study, Economic Value Added (EVA) and Market Value Added (MVA) across the selected banks were calculated based on the accounting figures and their difference was determined. The results showed significant difference between economic value added and market value added in selected banks is quite meaningful and significant.

The Siemens Digitalization Strategy in a Value-Based Management Framework

2021 ◽  
pp. 183-209
Author(s):  
Diana Claudia Cozmiuc ◽  
Ioan I. Petrisor
Keyword(s):  
Business Models ◽  
Net Present Value ◽  
Economic Value ◽  
Digital Technologies ◽  
Value Added ◽  
Economic Value Added ◽  
Discounted Cash Flow ◽  
Business Context ◽  
Value Based Management ◽  
New Business

The digital economy is growing at unprecedented speed and scale. Digital technologies generate the digital transformation of everything – organizations, industries, society. Digital technologies and digital business models disrupt industries in a digital vortex to a different degree by industry. In the new business context, value creation changes from the classical net present value of discounted cash flow or economic value added. Changes are given mostly by uncertainty. Reconciling classical value with digitalization becomes a research topic – the topic of this chapter. The chapter is a case study on Siemens, a Harvard Business Review case in digitalization, and one of the most important value-based management practitioners in the world, in the view of the economic value added model and in the view of journals indexed in Web of Science. The Siemens case is used to explore how economic value added and digitalization can work together and finds that they do in different stages that follow the logic of the innovation lifecycle.

scholarly journals VALUE BASED MANAGEMENT IN THE NEW ECONOMY

2020 ◽  
Vol 10 (3) ◽  
pp. 61-79
Author(s):  
Diana Cozmiuc ◽  
◽  
Ioan Petrișor ◽  
Keyword(s):  
Venture Capital ◽  
Business Models ◽  
Economic Value ◽  
New Economy ◽  
Value Added ◽  
Capital Budgeting ◽  
Economic Value Added ◽  
Value Based Management ◽  
Capital Funding

The main objective of this paper is to investigate the updates brought by the New Economy, especially new business models brought by digitalization, on value-based management. This objective is to see if classic value-based management and the updates brought by the New Economy conflict or are somehow harmonized or complementary. Another objective is to illustrate the updates brought by digitalization as case object on Siemens as case subject. The paper is focused on value-based management particularities for digitalization products, services, solutions. The context of the paper is digitalization technology and its impact on business and society, digital transformation. The phenomenon is new to society in all and therefore both literature review and case studies are highly relevant. The article is a case study on a top European corporation, both leader in digitalization and excellent value-based management practitioner. The case study is exploratory and descriptive, searching for the connections between digitalization and value. It relies on secondary evidence about Siemens. The questions are how New Economy value patterns work in practice and how do they relate to classic value indicators, net present value of discounted cash flow or its equivalent Economic Value Added. The paper finds a connection between innovation lifecycle and investment approval or capital budgeting. The beginning of the project lifecycle involves investment in intangible assets, business models, an open network structure and is funded by venture capital. As the idea matures close to customer contract negotiation stages, the network structure turns into a project budgeted via program management and equity and debt. The findings show how so-called new capital budgeting methods, venture capital, are reconciled with classic value-based management using equity and debt and Economic Value-Added investment appraisal. Both funding methods have their logic and place in idea lifecycle at Siemens. The paper finds a match between the lean start-up method and early stages of digital offering lifecycle, and a complementarity between venture capital funding methods and equity and debt capital funding methods given by the innovation lifecycle.

Theory of Cost Approach to Industrial Enterprise Management

2020 ◽  
Vol 8 (1) ◽  
pp. 10-21
Author(s):  
Elena Maevskaya
Keyword(s):  
Balanced Scorecard ◽  
Economic Value ◽  
Value Added ◽  
Enterprise Management ◽  
Economic Value Added ◽  
Historical Aspect ◽  
Value Based Management ◽  
Industrial Enterprises ◽  
Characteristic Features ◽  
The Cost

The article discusses the theoretical aspects of managing the value of industrial enterprises based on models that have become as wide-spread as possible, such as economic value added — EVA (Economic Value Added), MVA (Market Value Added), Equity value added — SVA (Shareholder Value Added), monetary value added — CVA (Cash Value Added), RCF (Resident Cash Flow) and Balanced Scorecard (BSC). The given models were chosen from a large number of proposed instruments in the works of domestic and foreign scientists, as the later concepts only developed the theory of their application. The purpose of the article was to share the determinants of the increase in the cost of industrial enterprises. The study is based on the theory of VBM (Value-Based Management) — valuebased management. The formation of this theory and the above-mentioned models in the historical aspect taking into account the factors of their occurrence are considered. The characteristic features of each model in terms of their application to cost management of modern domestic industrial enterprises were assessed. On the basis of the conducted study, the determinants of the increase in the cost of industrial enterprises and the methodology of their management have been determined.

scholarly journals ANALISIS ECONOMIC VALUE ADDED (EVA) SEBAGAI ALAT UKUR KINERJA KEUANGAN BANK SYARIAH

2018 ◽  
Vol 2 (1) ◽  
pp. 63
Author(s):  
Yuricke Marshella ◽  
Karuniawati Hasanah
Keyword(s):  
Commercial Bank ◽  
Financial Services ◽  
Economic Value ◽  
Value Added ◽  
Added Value ◽  
Economic Value Added ◽  
Financial Reports ◽  
Analysis Technique ◽  
The Subject

<p>This study uses descriptive studies with the aim to provide an overview of the aspects that are relevant in this case to help managers make decisions for the company. The subject of this research is a Sharia Commercial Bank registered with the Financial Services Authority. The instruments in this study are quarterly financial reports from Sharia Commercial Bank. The analysis technique used in this research is descriptive analysis.The results showed that Bank Muamalat pioneered the sharia banks in creating EVA but in 2016 and 2017 experienced a decline in economic value to not add value. This can happen because the muamalat decreases earnings to increase the amount of debt in the company. While the BJB bank does not create much added value even EVA is obtained is always negative this can be influenced by the amount of profit less than the amount of debt high enough, this can trigger kurannya interest shareholeder to invest in the bank.</p><p><br />Keywords: Sharia Commercial Bank, Economic Value Added</p>

scholarly journals FORMALIZATION OF FINANCIAL RISKS OF INDUSTRIAL ENTERPRISES IN THE CONTEXT OF VALUE MANAGEMENT ON THE BASIS OF VBM-APPROACH

2020 ◽  
pp. 72-83
Author(s):  
T. Vasilyeva ◽  
V. Boronos ◽  
Y. Humenna
Keyword(s):  
Financial Management ◽  
Industrial Development ◽  
Economic Value ◽  
Balance Sheet ◽  
Value Added ◽  
Value Management ◽  
Financial Risks ◽  
Economic Value Added ◽  
Value Based Management ◽  
Industrial Enterprises

The article is devoted to the investigation and identification of financial risks of industrial enterprises. The aim of the article is to formalize the financial risks of industrial enterprises’ activity and development in the context of the implementation of the value-based management. The modern tendencies and problems of functioning and development of the industrial enterprises of Ukraine are characterized by the following issues: deficit of the financial capital in the domestic and international markets; increasing the debts of enterprises within the real sector of the economy to a greater extent than the growth of equity is; low level of bond attraction as a source of additional financing; financing the majority of the reproduction processes of the industrial sector at the expense of own money of economic entities; monopolization of the main part of industrial production, which demotivates business entities to implement innovative activities; orientation of the sectorial structure of investments in favor of low-tech industries Based on the study of financial risks and the factors that shape them, the effects of the financial risks impact on socio-economic and financial indicators of industrial development have been defined. The financial risks that are controlled and managed by the financial management of the enterprise include non-systematic (specific) financial risks, internal risks (capital structure risks, credit and investment risks). Value-based management has been grounded as the effective system of financial management at the enterprise. The comparative analysis of the balance sheet, market and cash flow approaches within value management allows determine the balance sheet method, in particular the model of economic value added, as optimal for use in the management system of an industrial enterprise. The model of the value-based management for industrial enterprises, proposed in the work, has been built on the basis of harmonization of financial risk factors of industrial enterprises with the factors of the economic value added model. It will contribute to effective financial management of economic entities.

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