When it was introduced by Bennett Stewart in the early 1990s, EVA (short for economic value added) made headlines in the business press, with pundits enthusiastically touting it as the be-all and end-all metric of enterprise value creation. Soon, EVA was being embraced by many of the world’s most powerful corporations as an indispensable tool for measuring business performance and strategy outcomes. At the same time, many investors and analysts came to rely on EVA in place of traditional metrics, such as EPS and P/E ratio.
But over time, several shortcomings in EVA became apparentshortcomings that rendered EVA unwieldy and somewhat impractical for business managers and equity analysts alike.
Enter Best-Practice EVA. Not simply a new iteration of EVAEVA 2.0, if you willbut a quantum leap forward, Best-Practice EVA brings together powerful new tools and processes for measuring and improving the wealth-creation strategies and decisions of enterprises, while making EVA more intuitive, transparent, and simpler to use than ever before.
The official user’s manual to understanding and using Best-Practice EVA, this book is far from academic. It is leavened with the author’s energetic and engaging style, and brimming with telling anecdotes and case examples from companies as diverse as Amazon.com and Tiffany that:
- Show why EVA is the best tool to help CFOs and line teams measure and improve the value of business plans, investment projects, acquisitions, and decisions of all kinds
- Introduce EVA Momentum, an alternative to ROI and a powerful diagnostic tool that connects value creation to specific performance levers managers can understand and control
- Distill the power of EVA into a simple profit-sharing bonus formula that almost every company can use to turn managers into charged-up owner-operators
- Arm investors with proven EVA metrics that can predict share prices and isolate valuation pressure points, including a precise formula for using EVA to explain total shareholder returns
- Outline techniques for using EVA ratios to set more credible and actionable corporate performance targets
- Describe how to use EVA to repair the inherent flaws in conventional accounting profit measures and better reveal the true value of business decisions
- Unveil a present-value version of the EVA profit margin that replaces IRR and helps managers more accurately rate capital projects and evaluate any business decision in which cost-benefit trade-offs spread out over time and across income statement and balance sheet effects
- Provide powerful new valuation multiples that offer reality checks on valuations and plan projections
The official how-to guide for the powerful new generation of EVA tools and techniques, Best-Practice EVA: The Definitive Guide to Measuring and Maximizing Shareholder Value is an indispensable working resource for business executives and managers, finance professionals, board members, and institutional investors alike.
From the Back Cover
When it was introduced by Bennett Stewart in the early 1990s, EVA (short for economic value added) made headlines in the business press, with pundits enthusiastically touting it as the be-all and end-all metric of enterprise value creation. Soon, EVA was being embraced by many of the world’s most powerful corporations as an indispensable tool for measuring business performance and strategy outcomes. At the same time, many investors and analysts came to rely on EVA in place of traditional metrics, such as EPS and P/E ratio.
But over time, several shortcomings in EVA became apparent shortcomings that rendered EVA unwieldy and somewhat impractical for business managers and equity analysts alike.
Enter Best-Practice EVA. Not simply a new iteration of EVA EVA 2.0, if you will but a quantum leap forward, Best-Practice EVA brings together powerful new tools and processes for measuring and improving the wealth-creation strategies and decisions of enterprises, while making EVA more intuitive, transparent, and simpler to use than ever before.
The official user’s manual to understanding and using Best-Practice EVA, this book is far from academic. It is leavened with the author’s energetic and engaging style, and brimming with telling anecdotes and case examples from companies as diverse as Amazon.com and Tiffany that:
- Show why EVA is the best tool to help CFOs and line teams measure and improve the value of business plans, investment projects, acquisitions, and decisions of all kinds
- Introduce EVA Momentum, an alternative to ROI and a powerful diagnostic tool that connects value creation to specific performance levers managers can understand and control
- Distill the power of EVA into a simple profit-sharing bonus formula that almost every company can use to turn managers into charged-up owner-operators
- Arm investors with proven EVA metrics that can predict share prices and isolate valuation pressure points, including a precise formula for using EVA to explain total shareholder returns
- Outline techniques for using EVA ratios to set more credible and actionable corporate performance targets
- Describe how to use EVA to repair the inherent flaws in conventional accounting profit measures and better reveal the true value of business decisions
- Unveil a present-value version of the EVA profit margin that replaces IRR and helps managers more accurately rate capital projects and evaluate any business decision in which cost-benefit trade-offs spread out over time and across income statement and balance sheet effects
- Provide powerful new valuation multiples that offer reality checks on valuations and plan projections
The official how-to guide for the powerful new generation of EVA tools and techniques, Best-Practice EVA: The Definitive Guide to Measuring and Maximizing Shareholder Value is an indispensable working resource for business executives and managers, finance professionals, board members, and institutional investors alike.
About the Author
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.
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