Find the indicator of economic added value eva. Economic added value

Topic No. 3 Business valuation methods used both to assess the value of companies and to manage their value

Economic Value Added (EVA) model. Its modifications to assess the value of the company in an “as is” standard and taking into account planned investments in the company’s fixed and working capital. Factors for managing company value (Value Drivers) in the EVA model.

Economicvalueadded is an indicator of the company’s economic, rather than accounting, profit after paying all taxes and reduced by the amount of payment for all capital invested in the enterprise.

There are two main schemes for calculating EVA :

1) EVA = NOPAT – WACC × CE

2) EVA = (ROIC – WACC) × CE

NOPAT – net operating profits adjusted taxes;

WACC – weighted average cost of capital;

ROIC – return on invested capital;

CE – invested capital.

According to the EVA concept:

the value of the capital invested in the company is estimated

the assessment breaks down into an assessment of the market value of assets and the current value of the “economic profits” expected from them

« economic profit» - net operating income (NOPLAT) minus costs of paying for the cost of capital employed (CapitalCharge)

Let's consider the following three options for the relationship between the value of the EVA indicator and the behavior of owners:

1) EVA = 0, i.e. The market value of the organization is equal to the book value of net assets. In this case, the owner's market gain from investing in this organization is zero, so he wins equally by continuing operations in this organization or investing in bank deposits.

2) EVA > 0 means an increase in the market value of the organization over the book value of net assets, which stimulates owners to further invest funds in the organization.

3) EVA< 0 ведет к уменьшению рыночной стоимости организации. В этом случае собственники теряют вложенный в организацию капитал за счет потери альтернативной доходности.

main idea and the economic meaning of the EVA indicator is that the organization's capital must work with such efficiency as to provide the rate of return required by the investor, shareholder or other owner on the invested capital.

Calculation algorithm indicator of economic added value: from net operating profit (NOPAT) the fee for the use of equity and borrowed capital is subtracted, the remaining amount is the created value, which is measured by EVA.

To calculate economic added value(EVA) accounting indicator " Net profit"should be adjusted for the amount of so-called equity equivalents and adjustments to accounting indicators in terms of their market valuation:

EVA = NOPAT - Capital = NOPAT - WACC * CE, (9.8)

where NOPAT (Net Operation Profit After Tax) is the net profit received after paying income tax and minus the amount of interest paid for the use of borrowed capital, that is, this is the net profit according to financial statements(according to the Profit and Loss Statement) taking into account the necessary adjustments;

Capital (Cost Of Capital) - the cost of capital of the organization;

WACC (Weight Average Cost Of Capital) - weighted average cost of capital (measured in relative terms - in %), this is the cost of total capital (equity and debt).

CE (Capital Employed) - invested capital, which is capital determined taking into account the cost of resources not included in the balance sheet, is calculated by adjusting financial reporting data by the amount of “owners' capital equivalents”.

WACC is an indicator that characterizes the cost of capital in the same way that the bank interest rate characterizes the cost of borrowing a loan. The difference between the WACC and the bank rate is that this indicator does not imply a straight-line payment, but instead requires that the investor's total present income be the same as what a straight-line interest payment at a rate equal to the WACC would provide.

Cost of capital invested (CE) is calculated according to the formula:

CE = TA – NP, (9.9)

where TA (Total Assets) - total assets (balance sheet);

NP (Non Percent Liabilities) - interest-free current liabilities (on the balance sheet), that is, accounts payable to suppliers, the budget, advances received, other accounts payable.

The weighted average cost of capital (WACC) is determined as follows:

WACC = Ks * Ws + Kd * Wd * (1 - T), (9.10)

where Ks is the cost of equity capital (%);

Ws - share of equity capital (in%) (balance sheet);

Kd - cost of borrowed capital (%);

Wd - share of borrowed capital (in%) (balance sheet);

T - income tax rate (in %).

Cost of equity and (Ks) can be calculated using the formula:

Ks = R + b * (Rm - R) + x + y + f, (9.11)

where R is the risk-free rate of return (for example, the rate on deposits of Russian banks highest category reliability), %;

Rm - average return on shares on the stock market, %;

b - beta coefficient, which measures the level of risks and makes appropriate adjustments and adjustments;

x - premium for risks associated with insufficient solvency, %;

y is the premium for the risks of a closed company associated with the unavailability of information about the financial condition and management decisions, %;

f - country risk premium, %.

First modification of the model involves calculating the cost “as is”, that is, without additional investments. This assumes that the business will continue its normal business activities with the assets it already has.

K*=∑Act + PV (EVA), (1)

EVA = NOPLAT - ∑Act*WACCact (2)

PV (EVA) = EVA ,(3)

K* - market value of the enterprise (the property complex of the company or the entire capital invested in it);

∑Act - the total market value of the assets available at the enterprise;

PV (EVA) – current value of expected economic profits;

NOPLAT – net operating income minus tax burden

WACCact – actual weighted average cost of capital at the time of valuation;

WACC* - long-term weighted average cost of capital, based on its optimal structure (20% borrowed capital, 80% equity), as well as on the assumption that the cost of borrowed funds will reach the forecast value, based on the expected inflation rate and the average margin of banks .

Second modification of the modelEVA allows you to see the change in the market value of the enterprise in the influence of the project for the commercialization of RIA, but it does not require stopping the enterprise to modernize production assets for new project. In this case, the model takes into account the investment of significant investments, which modify the formula for the expected average annual economic profit.

EVA = Ipl* (ROIC - WACCpl), where (4)

Ipl – planned investments in a project for the commercialization of RIA, which does not require stopping production;

ROIC – average annual planned return on invested capital;

WACCpl. – the weighted average planned cost of capital attracted to the project for the commercialization of intellectual property.

The return on invested capital indicator can be found using the formula:

From this formula it is clear that the more valuable the RIA, the less new investments will be required in it and the more effective the additional investments will be, which will increase the ROIC and the expected average annual economic profit.

When identifying key cost factors the company must be guided by the strategy and phase of the company's life cycle, the presence of potential for improving performance indicators.

As part of company value management, the main factors involved in formula calculation, can be detailed based on smaller components:

The main factors shaping EVA:

By increasing the value of EVA by influencing the factors involved in the model, the manager increases the value of the company.

EVA can be increased as follows:

Increasing business profitability by increasing sales income and reducing costs (saving and optimizing current costs (reducing unprofitable production, etc.)).

Optimization of capital costs.

Information sources:

to calculate the actual values ​​of indicators - consolidated financial statements;

to calculate forecast values ​​of indicators

EVA - forecast financial statements, business plan,

financial and economic model and more.

Minimizing the weighted average cost of total capital.

To improve the efficiency of capital use (optimize the relationship between financial stability, price and return on capital), an analysis of the capital structure is carried out.

Let's consider the process of optimizing the capital structure using the method described by I.A. In blank form.

In accordance with this methodology, attracting additional capital, both from the enterprise’s own sources and from borrowed funds, has its limits and is usually associated with an increase in its weighted average cost. To attract investors, it is necessary to pay more income on shares or bonds when placing an additional issue.

When receiving additional loans, the value of the autonomy coefficient decreases and, as a consequence, solvency, which means an increase in the interest rate for the loan due to an increase in the level of bankruptcy risk. Similarly, when additional loans are invested in capital goods, inventories and other low-liquid assets, the liquidity ratio decreases, which also leads to an increase in the interest rate for the loan.

Attracting additional loans when high level financial leverage, and therefore financial risk, is possible only on the terms of an increased interest rate for the loan, taking into account the risk premium for the bank.

SrStSovCap = DolActCap*DivVyp + DolLoanCap*(StavCredit*(1 - CashPrib)), where

SrStSovCap - weighted average cost of total capital, %;

DolActCap - share of share capital;

DivVyp - level of dividend payments, %;

DolZaemCap - share of borrowed capital;

StavKred - level of interest rate for a loan, %;

NalPrib - income tax rate.

In contrast to the criterion of added economic value, indicator and model of monetary value added CVA( Cash value Added), which is practically never used in practice. are based on cash flow assessments. This model was developed by the Boston Consulting Group (BCG) as an alternative to the EVA approach.

The CVA indicator represents the difference between the cash flow from the operating activities of a project or business and the capital invested in it. In turn, the invested capital in monetary terms for each period is determined as the product of its average WACC value and the gross volume of investments.

For the purposes of investment analysis, the CVA value for a specific period t can be determined by the formula: CVA(t) = NOPAT(t) + DA(t) - RDFA(t) – IC(0) * WACC

Where RDFA(t) is the reimbursement of the depreciation fund (economic depreciation of assets). RDFA(t) is defined as a constant payment that should be made periodically at the average cost of capital rate in order to accumulate an amount equal to the gross investment in fixed assets of the FA project. Since the values ​​of RDFA(t) are the same for any period of the project's life cycle, the stream of such payments represents an annuity, the future value of which, when compounded at the WACC rate, must be equal to the initial investment in the depreciable assets FA. Then its value can be determined from the following relationship:

where FA is the initial gross investment in the fixed (depreciable) assets of the project. As in the EVA model, the correct use of monetary added value when evaluating investment projects leads to an exact match with the integral result obtained using the classical NPV method:

Market value added (MVA) is a measure that measures the amount by which a company's market capitalization (that is, the market price of its shares multiplied by the number of shares outstanding) exceeds the value of its net assets as shown on the balance sheet. This indicator is calculated using the following formula:

MVA=Market Value of Capital - Invested Capital

The MVA indicator has some disadvantages. First, it does not provide any insight into when the value was created (it could have happened this year or many years ago). Therefore, it would be more correct to focus on the annual change in the MVA indicator. In addition, since the amount of capital employed is taken from the balance sheet, the existing limitations of the methods accounting are also reflected in this indicator.

SVA(Shareholders Value Added) model was the forerunner of the EVA model. It also sees the value of an enterprise as the value of its property (in the event of its sale) plus the current equivalent of net income from the commercial use of this property (in the event that the enterprise continues to function as an operating one). Thus, the model focuses on directly measuring the change in the value of a business to shareholders (equity value), or shareholder value.

SVA calculation is based on determining the following parameters: pure cash flow and residual value of the business.

SVA = estimated equity value – book value of equity

The main disadvantage of this model is the complexity of calculations and the difficulties associated with forecasting cash flows.

The procedure for calculating the shareholder value added (SVA) indicator

Let the following data on the company be available:

net operating profit (EBI) for the last reporting year - 20,000 units;

duration of the forecast period - 5 years;

growth rate of net operating profit - 15%;

the rate of incremental investment in non-current assets and working capital is 50% of the increase in net operating profit;

weighted average cost of capital (WACC) - 12%.

In English-language economic and business literature the concept is widely used value driver , which is translated into Russian, either as a factor or as a mechanism. Driver means drive, driving mechanism. Therefore, this concept is broader than the traditional concept of factor. The first includes not only power, but also the way it is included in the process and the direction of action. It is characteristic that a driver is a more specific concept than a factor and is less generalizable.

The whole variety of factors influencing the formation of the value of an enterprise can be divided into three levels:

macro-level factors covering political, economic, legal, infrastructural, social, environmental features of the country;

meso-level factors covering the state of the industry in which the company operates;

micro-level factors covering the financial and economic state of the business, production potential, the marketing environment in which it operates, its corporate and organizational management structure.

Russian intersectoral modelRIM - the calculation is carried out “from final demand”: incomes together with prices form the value of real final demand, which ultimately determines the scale of production. The model implements the idea market equilibrium- the idea of ​​mutual influence of production, prices and income.

RIM- a macroeconomic intersectoral model of market equilibrium in the Russian economy, combining a traditional intersectoral approach and an econometric description of the behavior of the main market actors. The information base of the RIM model includes input-output tables in constant and current prices for 1980-2002, the general government budget, the balance of income and expenditure of the population, the labor balance, the capital balance, statistics of money circulation and financial markets.

In this intersectoral model, all elements of final demand are presented in an industry context. Thus, within the framework of this model, the problem of not only general, but also intersectoral equilibrium is realized.

In accordance with the structure of the developed inter-industry balances, the economy in the model RIM is represented by the following twenty-five industries:

1.Electric power industry

2. Oil production

3.Oil refining

4.Gas industry

5. Coal industry

6.Other fuel industry

7. Ferrous metallurgy

8. Non-ferrous metallurgy

9.Chemical and petrochemical industry

10.Mechanical engineering and metalworking

11.Forestry, woodworking and pulp and paper industries

12.Construction materials industry

13. Light industry

14.Food industry

15.Other industries

16.Construction

17.Agriculture and forestry

18. Freight transport and industrial communications

19. Passenger transport and non-production communications

20.Sphere of circulation, including commercial activities

21. Other activities in the sphere of material production

22. Education, healthcare, culture and art

23. Housing and communal services and consumer services.

24. Management, finance, credit, insurance

25.Science and scientific service

As part of interindustry calculations using the model indicators are also used average annual number of employees and average annual value of fixed assets.

Central part of the modelare determination of gross outputs and industry prices using a static model of the input balance (in matrix form: x = (E - A)-1*y) and its modification - the interindustry price equation (in matrix form: p*(A * X) + va = p*X)8.

Edwards-Bell-Olson (EBO) model

The EBO model allows express the value of share capital through financial statements, taking into account adjustments made to them related to inadequate reflection of the value of the enterprise’s property. According to this model, the value of a company is expressed through the current value of its net assets and the discounted flow of “excess income” - deviations of profit from “normal”, i.e. industry average.

Difference between EVA and EBO- is that EVA covers all capital invested in the company (equity and debt), and EBO covers only equity (equity).

The EBO model is based on three main assumptions:

1. The price of the company is equal to the current value of expected dividends:

where is the value of the company;

Dividend flow at a point in time;

Cost of servicing the company's equity capital, discount rate;

The mathematical expectation of a variable, i.e. its most probable value.

2. Clean surplus relation (CSR):

where is the value of net assets at a point in time;

Net asset value at a point in time;

Net profit for the period from to;

Dividends at a point in time.

3. The model of linear information dynamics is represented by a system of autoregressive equations:

where - information about future<сверхдоходах>;

Economic sense this model is the following. The equations reflect the fact that in a free market<сверхприбыли>, generated by the company, cannot remain indefinitely. Over time, excess profits should decrease, and the company's profitability level will be equal to other companies in its class. The dynamics of equalization remain the same for many different companies, which makes it possible to determine the coefficients of the system in question based on statistical data.

Model of the influence of capital structure on firm price under the assumptionabsence Modigliani-Miller taxes.

The model assumes :

absence of taxes on the company's profits and income taxation of owners of shares and bonds;

stable development and no profit growth. Sales proceeds less fixed and variable costs, including depreciation, selling, administrative and general expenses is equal to operating profit EBIT, EBIT - const;

the price of a company (as the price of any asset) over an infinite time period is determined by the capitalization of operating profit - V = EBIT / k, where k is the cost of capital of the company. For simplicity, it is assumed that profit is constant over the years (profit growth rate g = 0).

Indeed, with zero taxes, EBIT (= Disbursements to owners of equity and debt - Taxes) reflects all receipts to owners of capital; perfection of the capital market, which is expressed in the absence of costs when buying and selling valuable papers

and differences in interest rates (all investors have the same loan and investment conditions);< ks ;

debt capital is less risky (in terms of market systematic risk) than equity capital, and kd

Own capital (S) is equal to share capital, i.e. all net profit is distributed as dividends, and replacement of worn-out equipment is carried out through depreciation charges. Statement 1. The value of any firm is determined by capitalizing its net operating income ( EBIT , at T , at= 0, where

– tax rate) with a constant rate corresponding to the risk class of the company:

where is the value of a financially dependent company, i.e. using borrowed capital;

The cost of a financially independent company;

Required return for a non-leveraged firm;

Weighted average cost of capital.

It is assumed that both firms are in the same risk class. Since , as defined by the formula, is a constant, then.

according to the Modigliani-Miller model, in the absence of taxes, the value of a firm does not depend on the method of its financing The price of equity capital of a financially dependent company, , is equal to the sum of the price of equity capital of a financially independent company of the same risk group and the risk premium, the value of which depends both on the difference between the prices of equity and debt capital for a financially independent company, and on the level financial leverage, i.e. on the ratio of debt and equity capital:

Where D – market valuation debt capital of the company;

S– market valuation of the company’s share capital;

Constant price of borrowed capital.

Statement 2 states that as a firm's share of debt capital increases, the price of its equity capital also increases, and in a mathematically precise manner.

Thus, the Modigliani-Miller theory states that in the absence of taxes, both the value of a firm and the total price of its capital do not depend on the structure of sources.

Popularly explaining the result obtained using the model, Miller gave an example of dividing a pie, the size of which cannot be changed by using different methods of cutting it.

Modigliani–Miller modeltaking into account corporate taxes

Taking into account corporate income taxes, Modigliani and Miller made the conclusion is that debt financing increases the value of a firm because interest on loans is deductible from taxable income and therefore investors will receive a larger share of the firm's operating profits.

Own capital (S) is equal to share capital, i.e. all net profit is distributed as dividends, and replacement of worn-out equipment is carried out through depreciation charges. The value of a financially dependent firm is equal to the sum of the value of a financially independent firm from the same risk group and the effect of financial leverage, which is the tax savings equal to the corporate tax rate multiplied by the amount of borrowed capital :

It is important that when corporation taxes are introduced, the value of a financially dependent firm exceeds the value of a financially independent firm by an amount , atD. This difference increases with increasing leverage, so The value of the firm is maximized with 100% debt financing.

In the absence of borrowed capital, D = 0 dollars, the value of the company is equal to the market valuation of its share capital ( S):

where is the price of equity capital of a financially independent firm.

Statement 2. The price of equity capital of a financially dependent firm is equal to the sum of the price of equity capital of a financially independent firm from the same risk group and the risk premium, the amount of which depends on the difference between the price of equity and debt capital of a financially independent firm, the debt-to-equity ratio and the corporate tax rate.

Elena Larionova
consultant on financial analysis and planning of the group "Voronov and Maksimov", lecturer at the Faculty of Economics of St. Petersburg State University
http://www.vmgroup.ru/

IN last years In foreign publications, more and more attention is paid to approaches to assessing the efficiency of an enterprise. Among such approaches is the approach based on the construction of balanced score cards (BSC) and determination of business efficiency based on the analysis of its various aspects reflected in balanced cards, another approach - definition how profitable the business is from the position of the owners of the enterprise. The problem of determining profitability is solved by calculating the indicator of economic added value. This figure in foreign literature denoted by EVA (economic value added). It has so far been little described in the domestic literature. It is precisely because of its importance for assessing the efficiency of an enterprise that this article will focus on it.

Economic value added ( EVA) represents the enterprise's profit from ordinary activities minus taxes, reduced by the amount of payment for all capital invested in the enterprise.

The indicator is used to assess the efficiency of an enterprise from the position of its owners, who believe that the activity of the enterprise has a positive result for them if the enterprise managed to earn more than the return on alternative investments. This explains the fact that when calculating EVA, not only the fee for using borrowed funds, but also equity capital is deducted from the amount of profit. It can be argued that this approach to a greater extent is economic rather than accounting.

In practice, EVA is calculated as follows:

EVA = profit from ordinary activities - taxes and other obligatory payments - capital invested in the enterprise, i.e. balance sheet liability amount)* weighted average cost of capital (1)

Developing formula (1), we can show the calculation of the EVA indicator as follows:

EVA = (P - T) - IC * WACC = NP - IC * WACC = (NP / IC - WACC) * IC, (2)

Where:
P- profit from ordinary activities;
T- taxes and other obligatory payments;
IC- capital invested in the enterprise;
WACC- weighted average cost of capital;
NP- net profit.

EVA = (NP/IC - WACC) * IC = (ROI - WACC) * IC, (3)

Where:
ROI- return on capital invested in the enterprise.

From formula (3) it follows that the structure of sources plays an important role in calculating the EVA indicator financial resources enterprises and price sources. EVA allows you to answer the question of the company's investors: what type of financing (own or borrowed) and what amount of capital is needed to obtain a certain profit. On the other hand, EVA determines the line of behavior of the owners of the enterprise, directing investors' capital to the enterprise or vice versa, promoting their outflow to enterprises that provide more high performance profitability.

In formulas 1-3, to determine the EVA indicator, you need to know the weighted average cost of capital WACC. The weighted average cost of capital can be calculated using the following formula:

WACC = PZK * dZK + PSK * dSK, (4)

Where:
PZK- price of borrowed capital;
dZK- share of borrowed capital in the capital structure;
PSC- price of equity capital;
dCK- share of equity capital in the capital structure.

Essence of EVA is manifested in the fact that this indicator reflects the addition of value to market value enterprises and assessing the effectiveness of the enterprise by determining how this enterprise is valued by the market.

Market value of the enterprise = net assets (at book value) + deferred EVA, reduced to the present time (5)

In accordance with formula (5), the market value of an enterprise may exceed or be less than the book value of net assets, depending on the future profits of the enterprise. The EVA value determines the behavior of the owners of the enterprise in relation to investing in this enterprise.

Let's consider the following three options for the relationship between the value of the EVA indicator and the behavior of owners:

1. EVA= 0, i.e. WACC= ROI and the market value of the enterprise is equal to the book value of net assets. In this case, the owner's market gain from investing in this enterprise is zero, so he gains equally by continuing operations in this enterprise or investing in bank deposits.
2. EVA>0 means an increase in the market value of the enterprise over the book value of net assets, which stimulates owners to further invest funds in the enterprise.
3. EVA<0 leads to a decrease in the market value of the enterprise. In this case, the owners lose the capital invested in the enterprise due to the loss of alternative profitability.

From the relationship between the market value of the enterprise and the EVA values, it follows that the enterprise must plan future EVA values ​​to guide the actions of the owners in investing their funds.
The expectation of future EVA values ​​has a significant impact on the growth of the company's share price. If expectations are inconsistent, the stock price will fluctuate, and in the short term it will not be possible to draw a clear relationship between EVA values ​​and the company's stock price. Therefore, the task of planning profit, and with it planning the structure and price of capital, is the primary task of enterprise management. The more professional the management of an enterprise is, the higher, other things being equal, are the values ​​of the EVA indicator and the accuracy of planning. This explains the fact that in large Western enterprises, EVA values ​​are the basis for bonuses for managers, who become more interested in increasing the profitability of the enterprise and the growth of EVA. In this regard, EVA acts as the basis of motivation.
The EVA concept is often used by Western companies as a more advanced tool for measuring the performance of departments than net profit. This choice is explained by the fact that EVA evaluates not only the final result, but also the price at which it was obtained (i.e., how much capital was used and at what price).

Returning to formula (1), we can outline ways to increase the EVA indicator:

1. Increase in profit while using the same amount of capital;
2. Reducing the amount of capital used while maintaining profits at the same level;
3. Reducing the cost of raising capital.

Separately, we can highlight the reduction of taxes and other obligatory payments within the framework of tax planning, using various schemes allowed by the legislation of the Russian Federation.
The identified ways to increase EVA are implemented in specific activities carried out by enterprises. If the EVA indicator is chosen by an enterprise as a criterion for assessing the effectiveness of its activities, then the task is to increase the value of this criterion. Such an increase occurs both as part of the reorganization of the enterprise (see Table 1) and as part of current management activities.

Table 1: Activities aimed at increasing the efficiency of the enterprise

In general, to summarize, we can outline the role played by the indicator of economic added value in assessing the efficiency of an enterprise:

• EVA acts as a tool that allows you to measure the actual profitability of an enterprise, as well as manage it from the position of its owners;
• EVA is also a tool to show business managers. how they might affect profitability;
• EVA reflects an alternative approach to the concept of profitability (moving from the calculation of return on invested capital (ROI), measured in percentage terms, to the calculation of economic value added (EVA), measured in monetary terms);
• EVA acts as a tool for motivating enterprise managers;
• EVA improves profitability primarily by improving the use of capital rather than by focusing its efforts on reducing the cost of capital.

Thus, it can be assumed that the use of the EVA indicator in management accounting will help improve the quality of assessing the performance of Russian enterprises.

economic profit to measure the results of strategy execution

In the practice of Western companies, a family of models has been formed that are used to analyze economic profit and, on this basis, - creating company value. Some models are based on a simplified approach, rely solely on financial reporting data and do not imply any amendments to these data. On the contrary, another part of the models provides new approaches to the interpretation of a company's capital, and therefore, in my opinion, is of particular interest.

Value Added Models

Economic Value Added Model: EVA®

Model economic added value(economic value added, EVA®) was developed in 1982 by American analysts and consultants J. Stern and B. Stewart, and since then has been successfully used by the company they created in financial consulting and value management projects in companies in the USA and Europe , including countries of Eastern Europe, Asia, Latin America. As shown in table. 6.1, using the example of just the telecommunications industry, as of mid-2009, in each of the BRIC countries this model is already being used by national companies.

Table 6.1

Using the EVA® model in telecommunications companies in countries with growing capital markets

Note. Data obtained in preparation of a study of economic profit in telecommunications companies from the regional offices of Stern & Stewart. Some requests received an official refusal, motivated by the fact that data on the implementation of the concept is not disclosed until the company itself publishes this information.

The principles and features of this model were first substantiated and published by the authors themselves (;), and then by their followers (;). Over the past 20 years, this particular model has become the most popular in the field of company analysis based on economic profit, which was recognized in the emergence of the term “EVA revolution” [Erbar, Stewart, 2005]. Let's look at the distinctive characteristics of the model. Compared to the base case economic profit ( R.I.), Economic Value Added (EVA®) is distinguished primarily by the introduction of a specific approach to the analysis of capital by assessing the so-called equity equivalents(equity equivalents, HER) and including them in calculations of economic profit. These elements are consistent with the principles of a strategic approach to the analysis of invested capital discussed in Chapter 4. Taking into account equity equivalents, economic value added (EVA®) is calculated based on the spread of returns and invested capital:

nopat ee

= (ROCE ee - WACC) x CE ee, (6-1)

Where MSJATee - profit from operating activities after deduction of income tax, calculated taking into account equity capital equivalents; CEee - invested capital, calculated taking into account equity equivalents; RAOSEee is the return on invested capital, calculated taking into account equity equivalents.

To determine the key variables of the model, the Stern and Stewart framework uses two methods: the financing method and the operations method. Basic principle of the method financing- determination of the amount of invested capital and profit, based on the method of financing the company through adjustments to debt and equity capital. These steps are shown in Fig. 6.1. To establish the amount of borrowed capital as an element of invested capital, it is necessary to exclude spontaneous, non-commercial obligations that are not considered as an element of borrowed capital. Separately, it is necessary to analyze the “invisible components” of borrowed capital, for example, take into account the

nature of lease agreements, capitalize operating leases remaining on the balance sheet, and thereby increase borrowed capital in terms of long-term liabilities.

Net profit Plus:

Change in equity equivalents

Adjusted earnings of common stockholders

Dividends on preferred shares

Interest expenses Imputed interest

Saving on income tax

Equity holders of ordinary shares

Equity Equivalents

Adjusted shareholders' equity of common stock

Equity capital represented by preferred shares

Short-term liabilities (except interest-free)

long term duties

Invested Capital (CE)

Rice. 6.1. Calculation of EVA® components using the financing method

The invested capital after making the necessary “equivalents” in this model is called economic book value(economic book value) of invested capital, and it is this recalculated indicator of invested capital ( CEee) will continue to participate in value added calculations. Capital calculated by the financing method must correspond to a certain logic for calculating profit from core activities ( NOPAT). To adjust the profits accruing to the owners of the company, you need to consider that the equity equivalents that are included in invested capital represent nothing more than hidden profits for shareholders. That's why changes in equity capital equivalents, which

arise within a year (A HER), must be added to after-tax operating profit ( NOPAT). Therefore, the formula for return on invested capital ( ROCE) is supplemented: its numerator and denominator contain information about the company’s strategic resources.

N1 + InterestExpense X (1 - 1 ) ± A EE NOPAT EE ROCE --=-

CE book + EE CE EE

Where N1(net income) - net profit; Interest Expense- interest costs, including imputed interest; A HER(equity equivalents) - changes in the amount of equity equivalents; t- income tax rate; SE 00 k- invested capital at book value; HER- equity equivalents.

The second way to calculate the return on invested capital ( SEee) with amendments is a method operations, shown in fig. 6.2. The main principle of this method is to consider the capital and the result directly from the transactions carried out during the period, reflected in the asset balance sheet. In relation to capital, this means that it is necessary to consider it not according to sources of education, but from the standpoint of use. With this view, all invested capital, according to the degree of its participation in the company’s operations, is divided into working capital and fixed capital. At the same time, equity equivalents (HER) may be contained both in working capital, for example, affecting the amount of inventories, and in fixed capital, for example, affecting the composition and value of intangible assets or leased long-term assets.

Adjustments to operating method earnings suggest that changes in equity equivalents can affect two parts of the earnings calculation: cost and income taxes. Increase in equity capital equivalents (A HER> 0) will reduce cost, since it is formed in connection with the capitalization of expenses that are of a strategic nature, and with the emergence of additional assets instead of recognizing the expenditure of resources. Therefore, amendments to income tax calculations will be needed. The financing method and the operation method are different technologies solving the same problem of adapting reporting data to the principles of the company’s financial model. Therefore, their final results are identical.

Adjusted operating profit

Net current assets Plus:

Equity equivalents classified as current assets

Adjusted current assets

Other income

Cash outflow for income taxes, including:

Non-current assets at book value

Equity equivalents classified as non-current assets

Accrued tax liability

Tax deferred growth

Tax savings associated with interest on borrowed funds, including temporary interest

Net Profit from Operations (NOPAT)

Invested Capital (CE)

Rice. 6.2. Calculation of EVA® components by operation method

Finally, EVA model® provides explicit relationships with the company's current market capitalization. The present value of future expected economic value added (EVA®), on the one hand, and the value of invested capital, recalculated taking into account equity equivalents (economic book value), on the other hand, explain the value of the market capitalization of total capital (enterprise value, EV). A comparison of capitalization and invested capital makes it possible to evaluate added market value(market value added, MVA), which is considered as an essential component of the model itself. MVA calculated as follows:

MVA = EV-CE ee, (6-3)

EV = (LTL - C) + P E x N, (6-4)

Where MVA- added market value; EV(enterprise value) - capitalization of total capital; CE (capital employed) - invested capital adjusted for equity capital equivalents; LTL(long term liabilities) - long-term liabilities according to the balance sheet valuation; R E(price) - the rate of an ordinary share; C (cash) - cash according to balance sheet valuation; N- number of shares in circulation.

Positive value MVA is considered as the result of investors' favorable assessment of expected economic profits over the forecast horizon.

Managing the value of companies is one of the most productive modern concepts management. The world's leading companies successfully manage business value in accordance with the system value-based management (Value Based Management, VBM) aimed at creating and increasing value based on its assessment and monitoring. VBM is most successfully implemented in public public companies, where an increase in stock price reflects a positive market reaction to business development results. It is more difficult to manage the value of closed companies.

Increasing the value of a business is in the long-term interests of its owners and other stakeholders. Owners of companies that manage their value increase their well-being while simultaneously helping to improve the well-being of the company's counterparties. Interaction with successfully developing companies is beneficial for consumers, employees, the state, and creditors - in a developed market, the capital of inefficiently operating companies will eventually go to their more successful competitors.

In the process of managing the value of a company, the main criterion for acceptance is management decisions acts as an indicator of cost. The value of the cost is assessed using various value added models. The content of added value is defined in the concept of residual income, based on the idea of ​​“residual income”, or added value, defined as the difference between the company’s profit and the cost of raising capital . The main types of value in the concept of value management are called added and will be discussed below.

In the process of managing the value of a company, the following main indicators of value are applicable:

2. Economic value added EVA: calculation formulas

Economic Value Added (EVA) is the simplest and most common indicator in a value management system, developed by B. Stewart and registered by Stern Stewart & Co.

In the basic version, economic added value can be calculated using one of the following interrelated formulas (1) and (2):

EVA t = EBIT t – WACC × IC (t-1) (1)

• where EVA t -
• EBIT t — profit before interest and taxes received for period t;
• IC (t-1) – invested capital at the beginning of the t-th period according to the balance sheet estimate.

The main parameters of formula (1) are involved in calculating the return on invested capital ROI = EBIT / IC. Therefore, EBIT = ROI×IC. Then EVA = ROI×IC – WACC×IC = (ROI – WACC) × IC. Thus, the second formula for calculating EVA is:

EVA t = (ROI t – WACC) × IC (t-1) (2)

The main factors for the growth of the company’s value according to the economic value added (EVA) model:

• increase in profit (EBIT) with the same amount of capital (IC),
• reduction within certain limits in the amount of capital used (IC) at the same level of profit (EBIT),
• reducing capital acquisition costs (WACC) while increasing return on invested capital (ROI).

Benefits of using Economic Value Added (EVA):

• takes into account the cost of capital (WACC) as a weighted average of the costs of attracting various financial instruments;
• can be used to assess the efficiency of the company as a whole and its individual divisions;
• is based on accounting data on the amount of invested capital (IC), as a result of which it is less subject to subjectivity. At the same time, to increase the validity of the calculations, the author of the methodology, B. Stewart, proposed making adjustments to the value accounting estimate invested capital. According to some analysts, this leads to a decrease in the objectivity of calculations.

Application of the basic model of economic value added (EVA) allows you to estimate the value of a business from the perspective of all invested capital (Enterprise value, EV) - by summing up:

• book value of invested capital (IC)
• current (discounted) value EVA (economic value added) of the forecast period
• current (discounted) value of EVA for the post-forecast period

At the same time, the developer of the concept, B. Stewart, determines the need to introduce large quantity possible amendments and adjustments to the amount of net profit and the book value of invested capital.

In particular, in the process of managing the value of the company's own, the result of applying this model must be adjusted by subtracting the market value of long-term debt capital.

3. Olson, Edwards-Bell-Ohlson (EBO) models: calculation formulas

The Olson model is a modification of the basic model of economic added value, generated not by all invested capital (as in the basic model), but by the company’s own (shareholder) capital.

The Olson model calculation formulas presented in formulas (3) and (4) are similar to the formulas of the basic economic value added model (1) and (2):

• where EVA SI t -
• NI t –
• ROE t – return on equity in period t

Application of the Olson model allows you to estimate the value of a business from the position of equity capital using formula (6). For comparison, next to it is formula (5) - calculating the value of a business from the perspective of the total invested capital (Enterprise value, EV).

• where V IC – the value of the company in terms of total invested capital;
• EVA t - economic value added obtained during period t;
• WACC – weighted average cost of capital;
• IC – the amount of invested capital as of the valuation date at book value.V SI
• V SI - the value of the company in terms of equity capital;
• EVA SI t - economic added value attributable to equity and received for period t;
• NI t – net income to shareholders (netincome) received for period t;
• r e – rate of return on equity;
• SI (t-1) – the company’s net assets at the beginning of the t-period according to the balance sheet estimate.

Let's substitute expression (4) into expression (6) and assume t=0 - i.e. the company's value is calculated at time zero; then expression (6) will take the form of formula (7):

For purposes practical application the planning horizon is specified and forecast and post-forecast periods are distinguished. Direct revenue forecasts are generated for each year during the forecast period. At the end of the forecast period, the difference between the market and book value of the company is calculated.

Thus, formula (7) for practical use is as follows:

Formulas (7) and (8) represent EBO model (Edwards-Bell-Olson model)(Edwards-Bell-Ohlson EBO) or Olson model(James Olson articles 1990-1995)

Databases of fundamental indicators of Western companies contain forecasts of return on equity (ROE) for the next two years; In this regard, some authors suggest limiting the process of applying Olson’s model to two years. Then formula (8) will look like this:

Thus, according to the Olson model, to determine the value of a company, it is necessary to predict the difference (ROE - r e). The cost of equity (r e) can be calculated using or.

Using the Olson model, calculate the business value of a company whose book value of net assets at the valuation date is equal to 100 units. The rate of return on equity is 15%. In the 1st year of the forecast period it is planned to receive a net profit of 25 units. and send 5 units to pay dividends. In the 2nd year of the forecast period, it is planned to increase the return on equity by 1.15 times compared to the 1st year of the forecast period.

Solution:

The book value of net assets at the end of the first year (SI 1), calculated on the basis of the book value of net assets on the valuation date (SI 0 = 100 units), profit of the 1st year of the forecast period (25 units) and dividends paid in the first year (5 units), amounted to 120 units. = 100+ 25- 5. Return on equity in the 1st year ROE 1 = (25-5)/ 100 = 0.2; in the 2nd year ROE 2 =0.2*1.15=0.23. Then, according to formula (9), the value of the company according to the Olson model will be 160 units.

Used sources:

Valdaytsev S.B. Business valuation and enterprise value management: Textbook. manual for universities. - M.: UNITY-DANA, 2001. - 720 p.
Kosorukova I.V., Sekachev S.A., Shuklina M.A. Valuation of securities and businesses (+ CD-ROM): tutorial. University series. – M.: Moscow Financial and Industrial Academy, 2011. – 672 p.
Business valuation: textbook / Ed. A.G. Gryaznova, M.A. Fedotova. – 2nd ed., revised. and additional – M.: Finance and Statistics, 2009. – 736 p.

With the help of the FinEkAnalysis 2019 program you can quickly carry out Assessment of economic added value.

An example of a report automatically generated by the FinEkAnalysis 2019 program.

Estimation of economic value added
CJSC "Arsenal" as of 01/01/2010

Economic value added is a measurement method financial condition company that calculates real economic income. EVA can be calculated as the difference between net operating income after taxes and the opportunity cost of invested capital.

The main idea and meaning of the EVA indicator is that the company's capital must work with such efficiency as to provide the rate of return required by the investor, shareholder or other owner on the invested capital.

Economic added value is calculated using the formula:

EVA = NOPAT – WACC x CE

where NOPAT is net profit according to financial statements, taking into account the necessary adjustments;

WACC – weighted average cost of capital;

CE - invested capital.

Economic added value arises in a company if, over a given period of time, it was possible to earn a return on invested capital higher than the investor’s rate of return.

Positive value EVA represents an increase in market value compared to the book value of net assets and an incentive for owners to make further investments in the enterprise. A negative one leads to a decrease in the market value of the company and the loss of invested capital by the owners due to the lack of alternative profitability. At zero value EVA, the market value of the enterprise and the book value of net assets coincide, which means that the owner’s market gain is zero.

It is advisable to calculate EVA in 3 stages:

1) determination of the weighted average cost of capital;

2) making amendments to the profit and capital indicator;

3) determination of the return on invested capital, profitability spread and economic added value.

The weighted average cost of capital of Arsenal CJSC is 3.99% (see block "Calculation of the weighted average cost of capital")

Balance sheet adjustments are made to convert NOPAT and CAPITAL from accounting book value to economic book value. In Russian conditions, it is advisable to use an approach with a financial perspective to calculate NOPAT.

NOPAT calculation

Features of the enterprise's accounting policy made it possible to make adjustments when calculating economic profit by the amount of: costs associated with financing and interest income, investment loss. In this regard, economic profit exceeded accounting profit by 7723.3 thousand rubles.

When calculating the CAPITAL indicator, the approach with an operational perspective seems to be the least labor-intensive.

CAPITAL calculation

In 2009, amendments made when converting the balance sheet value of the capital indicator into economic value increased its level by 578 thousand rubles.

Calculation of EVA indicators - menagment

In 2009, Arsenal CJSC earned a profitability that exceeded the investor's requirement by 20.91%. The increase in the market value of the enterprise over the book value of assets amounted to 24,791 thousand rubles. This encourages the owner to further invest in the enterprise.