经济增加值的基本原理外文翻译已处理.docx

经济增加值的基本原理外文翻译已处理.docx

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经济增加值的基本原理外文翻译已处理

经济增加值的基本原理外文翻译

原文:

Foundationsofeconomicvalueadded

TheEVARevolution

Inamarket-driveneconomymanycompanieswillcreatewealth.Otherfirmshoweverwillundoubtedlydestroyit.Discoveringthoseeconomicfactorsthatleadtowealthcreationanddestructionamongcompaniesisimportanttomanyconstituencies,nottheleastofwhichiscorporateofficialsandinvestmentmanagers.Forcorporatemanagers,wealthcreationisfundamentaltotheeconomicsurvivalofthefirm.Managersthatfailorrefusetoseetheimportanceofthisimperativeinanopeneconomydosoattheperiloftheorganizationandtheircareer.

Findingthe“best”companiesandindustriesinmarketplaceisofprimaryimportancetoinvestmentmanagers.Withtheproperfinancialtools,portfoliomanagersmaybeabletoenhancetheiractiveperformanceover-and-abovethereturnsavailableonsimilarriskindexedpassivestrategies.AnewanalyticaltoolcalledEVAisnowassistingthiswealth-discoveryandcompany-selectionprocess.Theinnovativechangesthatthisfinancialmetrichavespawnedinthetwinareasofcorporatefinanceandinvestmentmanagementisthedrivingforcebehindwhatcanbeformerlycalledthe“EVArevolution”.

EVAinpractice

TheanalyticaltoolcalledEVA,forEconomicValueAdded,wascommerciallydevelopedin1982bythecorporateadvisoryteamofJoelSternandG.?

Bennett?

StewartⅢ.Thisfinancialmeticgainedearlyacceptancefromthecorporatecommunitybecauseofitsinnovativewayoflookingatthefirm’srealprofitability,unliketraditionalmeasuresofprofit?

suchasEBIT,EBITDA,andnetoperatingincome?

EVAlooksatthefirm’s“residualprofitability”,netofboththedirectcostofdebtcapitalandtheindirectcostofequitycapital.Inthisway,EVAservesasamodern-daymeasureofcorporatesuccessbecauseitiscloselyalignedwiththeshareholderwealth-imizationrequirement.

LargefirmslikeCocaCoca,Diagea,LillyEli,Guidant,andSPXhaveusedEVAasaguidetocreatingeconomicvaluefortheirshareholders.Bonusesandincentivepayschemesatthesefirmshavebeenbuiltaroundthemanager’sabilityorlackthereoftogeneratepositiveEVAwithinthefirm’soperatingdivisions.Positivepaymentsaccruetomanagershavingdivisionaloperatingprofitsthatonbalanceexceedtherelevant“costofcapital”,whilenegativeincentivepaymentsmayoccurifthelarger-termdivisionaloperatingprofitsfallshortoftheoverallcapitalcosts.Thus,byaaccountingforboththecostofdebtandequitycapital,EVAgivesmanagerstheincentivetoactlikeshareholderswhenmakingcorporateinvestmentdecisions.

EVAisalsogainingpopularityintheinvestmentcommunity.TheJune1996conferenceon“EconomicValueAdded”atCSFirstBostonandthe“rollout”ofGoldmanSachs’EVAresearchplatforminMay1997istestimonytothisexcitingdevelopment.Indeed,“buyside”investmentfirmslikeGlobalAssetManagementandOppenheimerCapitaluseEVAintheirstockselection,portfolioconstruction,andriskcontrolprocesses.Otherlargeinvestmentfirmsaretakingaseriouslook,andEVAisalsomakingmeaningfulinroadsinworldofglobalperformanceanalyticsMoreover,recentempiricalstudiesintheJournalPortfolioManagementamongotherfinanceandinvestmentjournalsshowsthatEVAisbeingadvancedinboththeacademicandfinancialcommunities.

EvolutionofEVA

Theevolutionofeconomicprofit?

economicvalueaddedEVA?

isafascinatingstudywithhistoricalrootsthatcanbetracedbacktotheclassicaleconomist’snotionof“residualincome.”Forinstance,considerthedefinitionofeconomicprofitmadein1890byfamousBritisheconomist,AlfredMarshall,regradingtherealmeaningofabusinessowner’sprofit:

“Whatremainsofhisprofitsafterdeductinginterestonhiscapitalatthecurrentratemaybecalledhisearningsofundertakingormanagement.”

BasedonMarshall’sstatement,itisevidentthattheeconomists’definitionofprofit?

namely,aresidualviewofincomeoreconomicprofit?

isradicallydifferentfromtheaccountingmeasuresofprofitinusetoday,suchasEBIT,EBITDA,ornetoperatingincome.Thisis,akeydistinctionbetweeneconomicprofitandaccountingprofitliesintheclassicaleconomists’notionthatacompanyisnottrulyprofitableunlessitsrevenuehavecoveredtheusualproductionandoperatingexpensesofrunningabusiness,andprovidedanormalreturnontheowners’investedcapital.Inamorefundamentalsense,thisresidualviewofincomeisreallywhattoday’seconomicprofitmovementisreallyallabout.

WhileEVAisrootedinclassicaleconomictheory,threepioneering20thcenturyAmericaneconomists?

IrvingFisherduringthe1930s,andNobelLaureatesFrancoModiglianiandMertonMillerinthelate1950stoearly1960s?

expandeduponthefullermeaningofeconomicprofitinacorporatevaluationcontext.IrvingFisherestablishedafundamentallinkbetweenacompany’snetpresentvalueNPVanditsdiscountedstreamofexpectedcashflows.Inturn,ModiglianiandMillershowedthatcorporateinvestmentdecisions?

asmanifestinpositiveNPVdecisions?

aretheprimarydriverofafirm’senterprisevalueandstockprice?

asopposedtothefirm’scapitalstructuremixofdebtandequitysecurities.

Basically,thetheoryofeconomicvalueaddedrestsontwoprincipleassertions:

1acompanyisnottrulyprofitableunlessitearnsareturnoninvestedcapitalthatexceedstheopportunitycostofcapitaland2thatwealthiscreatedwhenafirm’smanagersmakepositiveNPVinvestmentsdecisionsfortheshareholders.WhatexpandontheseEVAtenetsofwealthcreationaswemoveforwardinthisbook.Fornow,Let’slookatoperationaldefinitionsofEVAthathaveshapedthecurrenteconomicprofitmovementaswellasintroducethelinkbetweenacompany’seconomicprofitanditsmarketvalueadded.

OperationalDefinitionsofEVA

Therearetwopopularoroperational,waysofdefiningEVA?

?

namely,an“accounting”wayanda“finance”.Fromanaccountingperspective,EVAisdefinedasthedifferencebetweenthefirm’snetoperatingprofitaftertaxNOPATanditsweighted-averagedollarcostofcapital.Asaresult,EVAdiffersfromtraditionalaccountingmeasuresofcorporateprofitincluding,EBITearningsbeforeinterestandtaxes,EBITDAEBTTplusdepreciationandamortization,netincome,andevenNOPATbecauseitfullyaccountsforthefirm’soverallcapitalcosts.Thisanalyticaldifferenceisimportanttothefirm’sownersbecausetheEVAmeticisnetofboththedirectcostofdebtcapitalandtheindirectcostofequitycapital?

?

asreflectedtheshareholders’requiredreturnoncommonstock.Inthiscontext,EVAcanbeexpressedinmoregeneraltermsas:

EVANOPAT-$CostofCapital

Inthisexpression,thefirm’sdollarcostofcapitaliscalculatedbymultiplyingthepercentagecostofcapitalbytheamountofinvestedcapitalaccordingto:

$CostofCapital[%CostofCapital/100]*Capital

Inturn,thepercentagecostofcapitalisobtainedbytakinga“weightedaverage”ofthefirm’safter-taxcostofdebtandequitycapitalasshownby:

%CostofCapital[Debtweight*%After-taxdebtcost+Equityweight*%Costofequity]

EVA:

TheFinanceInterpretation

Fromafinanceperspective,EVAisdefinedintermsofhowitrelatestothefirm’s“marketvalueadded.”Inthiscontext,MVAorNPVisequaltothepresentvalueofthefirm’sexpectedfutureEVA.Additionally,sinceMVAisequaltothemarketvalueofthefirmlessthe“bookcapital”employedinthebusiness,itcaneasilybeshownthatEVAisrelatedtotheintrinsicvalueofthefirmanditsoutstandingdebtandequitysecurities.Statingtheseconceptsinmoreformaltermsyieldsthefamiliarvalue-basedrelationshipbetweenthefirm’s“marketvalue.

MVAandEVA:

GrowthConsiderations

ThebasicEVAandMVAlinkageoutlinedabovecanalsobeextendedtoamultiperiodframework.Withoutgettingintocomplicatedpricingdetailshere,onecanusea“constantgrowth”EVAmodeltoshowthepricingimportanceofboththefirm’snear-termEVAoutlookanditslong-termEVAgrowthrateindeterminingoverallcorporateorenterprisevaluation.Inthis“Gordon-like”model,therelationshipbetweenthefirm’sMVAanditsEVAoutlookforthefutureisexpressedas:

MVAEVA1/COC-gEVA

Inthisexpression,EVA1isthefirm’scurrentEVAoutlookone-yearaheadforecast,gEVAisthefirm’sassessedlong-termEVAgrowthrate,andCOCisthefamilialweightedcostofdebtandequitycapital.

Theconstant-growthEVAmodelshowsthatthefirm’smarketvalueaddedMVAispositivelyrelatedtoitsnear-termEVAoutlook,asmeasuredbyEVA1,aswellasthefirm’sassessedlong-termEVAgrowthrate,gEVA.Asshown,thefirm’sMVAisalsonegativelyrelatedtoanyunanticipatedchangesintheweighed-averagecostofdebtandequitycapital,COC.However,inviewofmoderndaycapitalstructureprinciplesalaMiller-Modigliani,this“costofcapital”interpretationdoesnotimplythatthefirm’scorporatedebtpolicyhasanymeaningfulimpactonthevaluationofthefirmanditsoutstandingdebtandequityshares.

PREVIEWOFWEALTHCREATERS

Let’snowtakeapreliminarylookattheMVAandEVArelationshipformajorU.S.wealthcreatorsanddestroyers.TheMVAandEVAcharacteristicsforfivelargeU.S.wealthcreators?

includingGeneralElectric,CiscoSystems,MicrosoftCorporation,Wal-MartStores,andMerck?

forthe11-yearperiodcovering1990to2000areshowninExhibits1.2and1.3.TheselargecapitalizationcompanieswerelistedbySternStewart&Co.asthetop-fiveU.S.wealthcreatorsbasedonMVArankingintheir2001PerformanceUniverse.

Exhibit1.2showsthatwealthcreatorslikeGeneralElectric,CiscoSystems,andMerckhavesubstantiallypositiveMVAthatg