Best-Practice EVA: The Definitive Guide to Measuring and Maximizing Shareholder Value

ISBN-13: 9781118639382 / Angielski / Twarda / 2013 / 348 str.

Bennett Stewart

Opis

Best-Practice EVA tells the new EVA story from the ground up. Stewart covers EVA essentials--the classic economic profit version of EVA--in the first three chapters of the book. He shows readers how simple and intuitive EVA really is, how it is defined, and why it is better than all other measures of corporate profit. You discover how it naturally guides managers into making all the right decisions--the ones that will truly maximize value. You see how to use it in profit-sharing bonus plans that create the powerful incentives of an owner. Later, Stewart introduces new ratios that make EVA much more powerful and much easier to use than ever before. The pinnacle of the new ratio framework is EVA Momentum, calculated by taking the change in EVA versus the prior period, and dividing by the revenues in the prior period. It measures the growth rate in EVA, scaled to the sales size of the business. It is the only corporate performance ratio where bigger always is better, because it gets bigger when EVA does, which means it should be every company's most important financial goal, the one ratio metric that everyone aims to maximize as the key measure of corporate success. Stewart then walks through the nuts and bolts of Best-Practice EVA, kicking off with an in-depth look at EVA Margin, or EVA as a percent of sales. It's a key productivity metric, and Stewart's candidate to replace ROI. The last link in the Best-Practice program is PRVit--the EVA market score report. Stewart shows how to read and interpret the report, how the score is determined, and why investors are turning to it to screen and rate stocks. He also shows why it is finding a home with CFOs and IR directors who want insights into how the market is pricing their stock. The book concludes with battle-tested tips from the firing line, practical suggestions for how you can test drive and adopt Best-Practice EVA at your company.

Spis treści

Preface ix

CHAPTER 1 EVA 101 1

CHAPTER 2 EVA and Value 19

CHAPTER 3 Accounting for Value 47

CHAPTER 4 What s Wrong with RONA? 85

CHAPTER 5 The New EVA Ratio Metrics 99

CHAPTER 6 EVA Margin 123

CHAPTER 7 Setting EVA Targets 157

CHAPTER 8 Put Momentum into Planning 191

CHAPTER 9 Dividing Multiples into Good and Bad 217

CHAPTER 10 Put EVA into Capital Decisions and Acquisitions 223

CHAPTER 11 EVA and the Buy Side 245

CHAPTER 12 Become a Best–Practice EVA Company 273

APPENDIX A The Best–Practice EVA Software Toolkit 287

APPENDIX B Corrective Accounting Adjustments 291

APPENDIX C Accounting for Corporate Charges in Detail 295

Glossary 299

About the Author 313

Index 315

O autorze

G. Bennett Stewart III is chairman and chief executive of EVA Dimensions LLC, a financial technology firm that provides software, data, and training and support programs to enable its corporate clients to test and implement Best–Practice EVA. The firm also offers EVA–based equity research services to help institutional fund managers make better informed buy–sell decisions and generate excess returns. Mr. Stewart was a founding partner of Stern Stewart & Co., the EVA consulting firm, from 1982 to 2006. He left to form EVA Dimensions by acquiring assets from Stern Stewart, including the EVA trademark for those assets. Mr. Stewart′s other book is The Quest for Value (1991), which has been described as "the definitive management guide to EVA." A globally recognized expert in the field of value–based performance management, incentive compensation, and accounting for value, he is a frequent speaker and author of articles on topics in those fields.

Blurb

Praise for Best–Practice EVA

"This is the best–ever guide to using EVA the most valuable and important corporate finance tool of the past thirty years."
Geoff Colvin, Senior Editor at Large, Fortune

"We′re implementing Best–Practice EVA with EVA Dimensions; I expect that the tools and metrics will become quite common in our vernacular at PepsiCo. The new EVA ratios are a helpful way to dissect EVA and help the organization focus on the opportunities."
Hugh F. Johnston, Executive Vice President and Chief Financial Officer, PepsiCo

"Throughout my career, I have been intensely interested in how value is created, and how financial leaders and innovations can play a critical role. Best–Practice EVA is as good a guide as I have seen on the subject. It is chock–full of practical techniques that any chief financial leader can use to help improve corporate performance and create owner wealth."
Jim Lawrence, Chairman, Rothschild North America and Co–Head of Global Investment Banking, Rothschild Group, and former CFO of Unilever and General Mills

"Best–Practice EVA provides practical tools for my everyday world of equity analysis particularly EVA Margin and EVA Momentum, two universally scalable metrics that provide insight into how CEO strategies and shifts in the competitive landscape change shareholder value."
Joe Joseph, Portfolio Manager, Putnam Investments

"This book should be the go–to guide for executives seeking to improve how they set objectives, align strategy efforts with value creation, and ensure crystal–clear success measurement. Business unit leaders will like the simple and practical approaches that clearly link EVA with actionable operating levers. The book is filled with examples that vividly bring the concepts to life. I recommend it highly."
Fareed A. Khan, Chief Financial Officer, United Stationers

"Bennett Stewart has liberated EVA for all. His new ratio–based version is a real innovation that takes the perceived complexity out of EVA and enables an organization to connect all its efforts to the creation of value . . . from the sales floor to the boardroom. I like it. We′ll use it."
Michael Archbold, CEO, Talbots, and former CFO of Vitamin Shoppe and AutoZone

"I believe EVA can be one of the tools that help corporate boards to safeguard and enhance shareholder value. Bennett Stewart exposes the flaws in conventional financial ratios pitfalls every director should understand. He cleverly explains the nuts and bolts of EVA and how board members can use it to rate business plans, set targets, judge and benchmark performance and even to value acquisition candidates on their real financial merits. A recommended read!"
T. K. Kerstetter, Chairman, Corporate Board Member

"Bennett Stewart has written an insightful and provocative reexamination of the EVA concept that he pioneered two decades ago. This is an important read for those interested in executive incentive structure and the practical applications of finance theory."
Charles M. Elson, Edgar S. Woolard Jr., Chair in Corporate Governance, Director, John L. Weinberg Center for Corporate Governance

"Best–Practice EVA provides fresh insights into the power of EVA the creative and important metric developed by Bennett Stewart. This is must–reading for anyone interested in increasing shareholder value."
Ira Kay, Managing Partner, Pay Governance