The application of EVA in management

The concept of economic value added (EVA) has been gaining increased recognition in China over the last decade as its initial intention is to assess the performance of the management and to help design the incentive-compensation system in a company. However, the EVA application in financial management has not been fully developed. Since currently the implementation of the “firm value maximization” as the general objective is not convincingly feasible in financial management in China, this article analyzes some unique aspects of its attributes such as measurability, easy usability as a convenient measure of operation performance. EVA is then entitled to be the objective of business financial management functioning units in this paper and the feasibility of this objective is proved from several aspects such as financing, investing and dividend policy-making which aims at the wider range of application of EVA in China.