Gross value added (GVA) characterizes the final result of production activity and represents the value added by processing in this production process. At the level of sectors of the economy, GVA is determined by subtracting intermediate consumption (IC) from gross output (IG). At the same time, the GVA includes the cost of fixed capital consumed in the production process (depreciation).

Intermediate consumption - is the value of goods and services that are consumed during the current period for the purpose of producing other goods and services: material resources; office and household expenses; payment for transport, communication, VC services; travel expenses; current repair of buildings; advanced training of employees, etc. Depreciation is not included in intermediate consumption.

The absolute increase in GVA in total is calculated as follows:

including:

a) due to changes in labor costs

b) due to changes in labor productivity

c) due to a change in the share of gross value added in gross output (or a change in the share of PP in BB)

Where - index of time spent;

- labor productivity index;

- the share of GVA in the gross domestic product of the reporting and base periods, respectively (this may also be the share of intermediate consumption in gross output),

,
- GVA of the reporting and base periods, respectively,

- gross output of the reporting period.

5. Methods for determining GDP (gross domestic product).

Gross domestic product(GDP) is the result of production activities in the economic territory of a given country, i.e. it is the result of the activities of both residents and non-residents. It is the value of goods and services produced and therefore does not include intermediate goods and services.

Gross national product- it is the result of the activities of residents of the country, regardless of whether it is produced in the economic territory of this country or outside it.

GDP can be calculated by three methods: production, distribution and final use.

GDP calculated production method, reflects the contribution of each sector of the economy and their individual subjects to the creation of a single macroeconomic result. Thus, in this case, analyzing GDP, one can follow its production structure, as well as the tax structure of the economy.

The calculation of GDP by the production method involves the summation of the gross value added created in all sectors of the economy (
), and net taxes (N-S), i.e. the difference between the amounts of taxes and subsidies on products and services, including imported ones.

Proposed by the consulting company Stern-Stewart, EVA (economic value added) is an estimate of the economic profit of an organization. In essence, this is the profit received by the organization, reduced by the cost of capital.

The key question this metric helps answer is how well are we delivering value to our shareholders?

EVA - Economic Value Added

This metric is used as a mechanism for internally managing a company's operations and investment decisions to ensure that it meets or exceeds investor expectations.

EVA is a measure of economic returns that exceed investor expectations and, barring accounting anomalies, serve to directly compare companies with the same risk profile. Examples of anomalies are spending on R&D and training; according to theory, these are investments that should be considered in this capacity.

The ability to accurately compare performance is based on the cost of capital. Under the EVA approach, organizations only make a profit when they include the cost of capital in their financial performance calculation. Capital is not free. There is an opportunity cost of capital, i.e. investors can invest their funds in various instruments (government bonds, banks, etc.). To get the actual profitability of the enterprise, it is important to subtract the cost of capital from the profit. Equity is accounted for both as a debit and as a credit. Capital is the measure of all Money invested and the company for the entire time of its existence, regardless of their source.

EVA is also actively used to set the size of incentive bonuses for managers. In our post-crisis world, it is especially interesting that the bonus structure encourages careful balancing between short-term and long-term financial results (which protects the interests of shareholders who have made long-term investments to the enterprise). Moreover, the approach to accrual of bonuses is being improved in such a way that managers share the “sorrow and joy” of investors. As said CEO one organization that has adopted an EVA-based bonus approach, “we want to make sure that the people who work (in this company) have the same goals as the people who invest in this company.”

The incentive payout model is based on the bonus pot. The bonus bank works like this: each year the bonus is determined by the EVA compared to its target value, and then this bonus is placed in the bonus bank. Typically, a third of this bonus is paid out for the current year, with the remainder being held as a premium for the risk of EVA falling in subsequent years.

It must be emphasized that employees should be rewarded for the results of the previous year, this will contribute to improvements in subsequent years. It is also important to note that bonuses are not necessarily paid when EVA is positive, as the trend may be downward. Conversely, if a division started the year with a significantly negative EVA, but showed a significant positive trend during the year, then bonuses may be paid even if the resulting EVA remains negative.

How to take measurements

Information collection method

The data is taken directly from the profit and loss account, taking into account the payment for the cost of capital.

Formula

Economic Value Added = Net Operating Profit After Tax - (Cost of Capital × Capital Employed).

EVA \u003d NOP AT - (C × K),

where NOPAT - net operating profit after taxes;
C - weighted average cost of capital (WACC), which is the average rate at which the company expects to raise funds from shareholders to finance its assets; K - used economic capital.
The cost of capital in organizations is measured using the CAPM (Capital Asset Pricing Model) method. The nominal value of the company's capital is calculated as the sum of the basic risk-free rate of return and the β-coefficient of the asset's sensitivity to changes in market returns. Thus, the equity rate is the expected rate of return for investors who buy shares in a company. It is expressed as follows: Investors' expected return (future) = Risk-free rate of return (future) + company's β (relative measure of volatility) × Equity risk premium (history).
The equity risk premium is a return that exceeds the risk-free rate of return that investors expect from investing in risky assets. So, if the risk-free rate of return is 7%, β is 1.1, and the implied risk premium is 4%, then the company's cost of capital would be: 7% + (1.1 × 4%) = 11.4%.
The cost of borrowing is the rate of return at which a lender lends money. To determine this rate, you need to calculate the profit. This is usually done using a discounted cash flow analysis. The cost of borrowing should be calculated after taxes as follows: Cost of borrowing after taxes = Cost of borrowing before taxes x (100 - Marginal tax rate).

Measurement frequency

Economic value added is calculated on a monthly basis. The weighted average cost of capital is determined on an annual basis.

The source of information is the balance sheet data.

Collecting data for calculating economic value added requires a little more effort than for others. financial indicators. The more available the required data, the cheaper and faster the EVA calculation will be. If the data is available, then you just need to create a new formula in the system accounting. However, if important data is lost, restoring it can be very costly.

Target values

Performance in terms of economic value added can be assessed by comparison with the performance of organizations with a similar risk profile.

Example. Consider the example of a company that designs, manufactures and markets furniture for the home (example taken from James Creelman in Building and Communicated Shareholder Value, London: Business Intelligence, 2000). All figures are in thousands of US dollars.

EVA is used as a way to value an organization's investment. Consider, as an example, a packaging line that no longer meets customer requirements. The new line will help the organization generate additional revenue as well as reduce packaging costs. The net effect is estimated as an increase in after-tax profit (net income) of £2m. However, additional operating capital of £7.5m is required. Assuming a cost of capital of 11%, we get the following results:

• Increasing net income (NOPAT) - £2 million.
• The cost of additional operating capital (11% of £7.5m) is £0.8m.
• Economic value added = 2 - 0.8 = £1.2 million.

Remarks

The introduction of EVA rather refers to changes in corporate culture than to finance. Organizations must be confident that they have created a culture in which economic efficiency much more important than just profit and loss.

EVA (Economic Value Added)- economic profit - is one of the key indicators in the evaluation production efficiency companies. Reflects economic value added. EVA is usually estimated for one reporting period (quarter, year, less often - a month) and reflects economic profit after taxes, interest on attracted and equity capital (invested for the period).

EVA calculation algorithm

Methods and formulas for calculating EVA

EVA = (RENT-WACC) * SOS = NOPAT - WACC*SOS
Where,
RENT - return on investment, calculated RENT = NOPAT/SOS;
WACC - weighted average cost of capital;
SOS - own working capital(capital employed) = total assets - current liabilities.

EVA = NOPLAT - NC = NOPLAT - IC * WACC
Where,
NOPLAT - indicator of net operating profit;
NPC - normal costs of capital;
IC is the amount of investment.

EVA = (ROCE - WACC) * IC = SPREAD * IC
Where,
SPRED (spread) - the difference between ROCE and WACC.
If SPREAD > 0, then the company's return exceeds the expected return of investors (initially set based on the cost of capital WACC).

EVA formula by B. Stewart

EVA=NOPAT-WACC*IC

Disadvantages of the EVA method and model

Stages of implementing the EVA management model in the enterprise

Decree of the Ministry of Economy of the Republic of Belarus and the Ministry of Labor of the Republic of Belarus dated 01.01.01 N 48/71 “On approval of methodological recommendations for calculating value added and value added per employee average employee(labor productivity value added) at the organization level”

ON THE CALCULATION OF VALUE ADDED AND VALUE ADDED PER ONE AVERAGE WORKER (VALUE ADDED LABOR PRODUCTIVITY) AT THE ORGANIZATION LEVEL

CHAPTER 1

GENERAL PROVISIONS

1. Guidelines for the calculation of value added and value added per average employee (labor productivity in value added) at the organization level (hereinafter referred to as the Guidelines) are intended to guide the work of republican government bodies and other government organizations subordinate to the Government of the Republic of Belarus, regional executive committees and the Minsk City Executive Committee.

2. Methodological recommendations apply to organizations in the sphere of production (industrial, construction and agricultural organizations) that are subordinate (run) to the republican bodies government controlled and other state organizations subordinate to the Government of the Republic of Belarus, regional executive committees and the Minsk City Executive Committee.

CHAPTER 2

CALCULATION OF VALUE ADDED AT THE ORGANIZATION LEVEL

3. Value added at the level of an organization is that part of the value of products (works, services) that is created in a given organization. Added value is the source economic growth and the formation of income for the owners of the organization, employees, the state.

4. Economic effect maximization of the added value of the organization is expressed in the realization of the interests of:

owners - in providing the opportunity to solve managerial problems of the organization's development, including the supply, sale of manufactured products (works, services) and the receipt of dividends, interest, income;

investors - in the payback of invested capital and its profitability over time;

workers - in the opportunity to receive decent wages;

states - in the fulfillment by organizations of obligations to pay taxes to the republican and local budgets, which allows the latter to solve social and environmental problems of society.

The added value, in contrast to the profit indicator, coordinates the interests of not only corporate, but also of a state nature, since it takes into account the requirements of the legislation to ensure social and environmental guarantees.

5. The value added by the organization is calculated for all types of activities carried out. economic activity in the following way:

the volume of production of products (works, services) in selling prices, net of accrued taxes and fees from the proceeds minus material costs (excluding payment for Natural resources) and other expenses, consisting of rent, entertainment expenses and services of other organizations.

DS \u003d V - MZ - PrZ,

where DS is the value added by the organization;

V - the volume of production (works, services) in selling prices, net of accrued taxes and fees from the proceeds;

MZ - material costs minus payments for natural resources;

PrZ - other costs, consisting of rent, entertainment expenses and services of other organizations.

6. The formation of indicators of the volume of production of products (works, services) and the costs of their production is carried out on the basis of synthetic and analytical accounting data in accordance with regulatory legal acts on accounting.

CHAPTER 3

CALCULATION AND ANALYSIS OF LABOR PRODUCTIVITY AT THE ORGANIZATION LEVEL

7. Labor productivity at the level of the organization is calculated in actual prices as the ratio of value added calculated in accordance with paragraph 5 of these methodological recommendations for the reporting period, to the average number of employees of the organization for the same period.

8. The growth rate of labor productivity at the organization level is calculated in actual prices as the ratio of labor productivity at the organization level in actual prices for the reporting period to labor productivity at the organization level in actual prices for the corresponding period of the previous year.

9. The ratio of the dynamics of labor productivity at the level of organization and wages of employees of the organization is calculated as the ratio of the growth rate of labor productivity at the level of the organization in actual prices and the nominal accrued average monthly wage.

If the ratio of the growth rate of labor productivity at the level of the organization in actual prices and the nominal accrued average monthly wage is greater than one, consider that there is a faster growth in labor productivity.

10. The calculation of labor productivity and its analysis with the linkage of the wages of workers to agricultural organizations, taking into account the specifics of agricultural production, it is advisable to carry out at the end of the year.

Economic Value Added, EVA stands for Economic Value Added. The indicator answers the questions of what additional income the company creates on invested capital, whether the owners will receive a profit. To calculate EVA, you can use data from the standard balance sheet and income statement. Details are in the article.

What is EVA

The concept of Economic Value Added (EVA) was developed in the late 80s by Joel Stern and Bennett Stewart.

EVA is the difference between a company's earnings and its cost of capital. Sounds simple. But if we follow the position of the authors, then the calculation of EVA will require about 160 adjustments to the profit value. In practice, it is easier to evaluate the value of the indicator.

Classic EVA Formula

The calculation of EVA according to the classic formula proposed by Stuart and Stern looks like this:

EVA = NOPAT - WACC x CE,

where NOPAT (Net Operating Profit After Tax) is post-tax operating profit excluding accrued interest on loans and borrowings received, rub. When calculating it, all income and expenses of the enterprise reflected in the income statement, including income tax, are taken into account. To determine NOPAT, interest payable must be added to the net profit of the reporting period.

CE (Capital Employed) - invested (invested) capital, rub .;

WACC (Weighted Average Cost of Capital) - weighted average cost of capital, % per year, which is calculated by the formula:

WACC = r LC × LC: CE + r OC × OC: CE,

where r LC is the average cost of borrowed capital, % per year;

LC (Loan Capital) – borrowed capital or capital received in the form of debt obligations, rubles;

OC (Own Capital) - equity capital invested by the founders in the enterprise, rub.;

r OC is the cost of equity, % per year. It is determined by shareholders and shows the minimum level of return that they expect to receive on invested funds.

Formula for calculating EVA based on accounting data

The EVA formula can be converted to a more convenient form for calculations based on accounting data:

EVA = Net income - r OC × OC.

Next is the matter of technology. The value of net profit is taken from the income statement (p. 190), equity - from the balance sheet (p. 490, value at the beginning of the period). It remains to decide on the cost of equity (rOC). (See also roe return on equity.) In practice, most often it is equated with the profitability that the owner wants to see. If a specific figure is not named, you can use the formula:

r OC = r wr × β,

where r wr is the average rate of low and risk-free investments (for example, the rate on deposits in highly reliable banks), % per annum;

β – additional fee for the risk when investing in a particular enterprise (in % per annum), required by the investor.

The amount of risk payment is individual for each enterprise and is determined by the shareholders. Naturally, in financial statements such data are not available. If the founders have not voiced their wishes - how much more they want to receive for their risks, then the following can be used as an assessment of this indicator:

• , if it was determined at the stage of the decision to open an enterprise;
• average market return on equity for enterprises in this industry.

What adjustments to take into account when calculating economic value added

Before proceeding with the calculation of economic value added, it is necessary to adjust the financial statements - to approximate profit and invested capital, calculated according to accounting standards, to real monetary values. Read how to correctly calculate EVA by making the necessary adjustments to the company's financial statements.

Step-by-step algorithm for calculating EVA by balance

I will show step by step how to calculate it according to the financial statements, using the example of the conditional company Delta Co.

Step 1. Bring the balance sheet and other statements to a convenient form

• balance sheet (No. 1);
• reports on financial results(No. 2) and equity changes;
• explanations for the reports that will be required to calculate the EVA indicator.

Bring accounting forms No. 1 and No. 2 to a unified form. The main frame of the table was developed by McKinsey, and I adjusted it to calculate EVA according to RAS.

To correctly convert the balance, copy the values ​​​​of the articles "Initial cost of fixed assets", "Initial cost of intangible assets", "Goodwill" and depreciation data from the explanations to the financial statements. The balance currency will remain the same as in the standard report (see Table 1). Similarly, with the balance sheet, convert the income statement (see Table 2).

Table 1. Reformulated balance sheet, thousand rubles (fragment)

table 2. Reformulated statement of financial results, RUB thous. (fragment)

Indicate the cost price, selling and administrative expenses in the form without depreciation, we will single it out as a separate indicator. Take the values ​​from the explanations to the financial statements. "Retained Earnings" and "Dividends" can be found in the statement of changes in equity.

Step 2. Calculate net operating income

The basis for calculating EVA is net operating profit after taxes (NOPAT). Subsequently, from it we subtract the product of the invested capital and its value.

Take the converted income statement. Calculate Net operating profit according to the formula:

NOPAT \u003d EBIT - N + Ot (2)

Where , rub.;

EBIT (Earnings before interest and taxes) - profit before taxes and interest, rubles;

Н – adjusted income tax, rub.;

Rel is the change in deferred tax liabilities and assets, rub.

To find earnings before taxes and interest, use the formula:

EBIT = B - C - K&U - A (3)

where EBIT is earnings before taxes and interest, RUB;

B - revenue, rub.;

С – prime cost without depreciation, rub.;

K&U - commercial and administrative expenses without depreciation, rub.;

A - depreciation, rub.

Calculation example

For Delta & Co., profit before taxes and interest in 2015 amounted to 83,858 thousand rubles (291,287 - 121,207 - 48,160 - 37,599 - 463). The remaining years are calculated by analogy. The base for adjusting income tax will include interest payments and income, as well as items that are not related to the main activity:

• provision for income tax (line 2410 + line 2430 - line 2450 + line 2460);
• tax protection for interest payable (line 2330 × 20% tax rate);
• tax on interest receivable (line 2320 × 20% tax rate);
• non-operating income tax, if any.

The adjusted tax in 2015 is 13,347 thousand rubles (10,726 thousand rubles + 893 thousand rubles - 130 thousand rubles + 11 thousand rubles + 14,414 thousand rubles × 0.2 - 5181 thousand . rub × 0.2 + 0). Similarly, 2014 and 2015 can be calculated.

Change deferred taxes According to the balance sheet data for 2015 and 2014, find the current and last year: the difference between IT and SHE in 2015 (p. 1420 - p. 1180) minus the difference between IT AND SHE in 2014. In the example, the deferred tax is 1145 thousand rubles ((15,070 - 1354) - (14,046 - 1475)). Similarly, determine the indicators for 2014 and 2013.

We have all the metrics to find net operating income. We substitute the found values ​​into the formula for net operating profit after taxes for the company for 2015 and get 71,656 thousand rubles (83,858 - 13,347 + 1,145).

Step 3: Find your invested capital

Calculate the amount invested in the main activity. Do not include income from non-core assets. We use the formula:

IC \u003d CHOB + CHOS + Pr (4)

where IC is the capital invested in the main activity, rub.;

NSC - net working capital (line 1200 - line 1240 - (line 1521 + line 1522 + line 1523 + line 1524)), rub.;

NPI - net fixed assets - residual value Fixed assets and intangible assets (line 1150 + line 1110 + line 1120), rubles;

Pr - other operating assets and liabilities (line 1190 - line 1450 - line 1550 - line 1430 - line 1540), rub.

Calculate net working capital:

CHOB \u003d OA - KFV - (KZ + Zn) (5)

where CHOB - net working capital, rub.;

ОА - current assets (line 1200), rub.;

KFV - short-term financial investments (line 1240), rub.;

KZ - accounts payable (line 1521 + line 1522), rubles;

Zn - debt on taxes and contributions (line 1523 + line 1524), rub.

Calculation example

Capital invested at the beginning of 2015:

CHOB \u003d 99 667 - 55 160 - (25 621 + 3597 + 5936 + 986) \u003d 8367 thousand rubles.

CHOS = 200,964 + 342 = 201,306 thousand rubles.

Pr \u003d 34,176 - 2303 - 14,631 - 4958 - 7372 \u003d 4912 thousand rubles.

IC = 8367 + 201 306 + 4912 = 214 585 thousand rubles.

Step 4: Assess your return on invested capital

To calculate the EVA on the balance sheet, let's calculate what return the company receives from the money invested. To do this, we find the ratio of net operating profit after taxes to capital:

ROIC = NOPAT: IC × 100% (6)

where ROIC (Return on invested capital) is the return on invested capital, %;

NOPAT – net operating profit after taxes, RUB;

IC - invested capital at the beginning of the year, rub.

Calculation example

For Delta & Co, the return on invested capital for 2015 is 33.393 percent (RUB 71,656 thousand : RUB 214,585 thousand × 100%).

Specify the value of ROIC up to hundredths, otherwise a noticeable difference will be created in subsequent calculations.

Step 5. Determine the Economic Value Added of EVA

To determine the economic value added, we lack the weighted average cost of capital:

WACC = Ks × Ws + Kd × Wd × (1 – T) (7)

where WACC (Weight average cost of capital) is the weighted average cost of capital, %;

Ks – cost of equity,%;

Ws – equity share, units;

Kd is the cost of borrowed capital, %;

Wd is the share of borrowed capital, units;

T is the income tax rate, units.

For Delta Co., we take return on assets as the cost of equity. The tax rate is 20 percent. Plugging the values ​​into formula (8), we find that WACC is 11.68 percent (10.2% × 0.35 + 15.6% × 0.65 × (1 – 0.2)).

Let's use an alternative formula to calculate economic value added:

EVA = IC × (ROIC - WACC) : 100% (8)

where EVA is economic value added, rub.;

IC – invested capital, rub.;

ROIC – return on invested capital, %;

WACC is the weighted average cost of capital, %.

Example of calculating EVA by balance

From here, the company created economic value added for its shareholders in 2015 46,592.5 thousand rubles (214,585 thousand rubles × (33.393% - 11.68%) : 100%).

Let's recheck the correctness of the calculation of the indicator according to formula 1. The added value of the company is 46,592.5 thousand rubles (71,656 - 214,585 × 11.68: 100). The numbers converge.

If the company maintains economic value added at the level of 46 thousand rubles or manages to increase it, the business has good prospects for further development.

Table 3. Weighted average cost of capital

Three Ways to Increase EVA

1. Increase operating profit with constant spending on capital.
2. Invest additionally in projects whose profitability is higher than the cost of raising money.
3. Free up capital. If a company has invested in an activity or property whose income does not cover the cost of capital, it can realize this resource and receive funds.