...Abstract Economic Value Added (EVA) is a value based performance measure that gives importance on value creation by the management for the owners. Profit maximization as a concept is age-old, wealth maximization is matured and value maximization is today’s wisdom. Stern Stewart’s EVA raises storm in corporate world and gives a new way to think about rewarding management. Usability of EVA largely depends on the quality of accounting information system, as traditional information system will not provide sufficient information to compute true EVA. Thus, EVA is required to be tailored in line with accounting system, management philosophy and the degree of demand of such a system. In this paper, an earnest effort has been made to explain theoretical foundation of EVA with its origination, definition, ways to make it tailored, adjustments required, scope and some other related issues. The methodology used is a type of theoretical mining of logics resulting a step-by-step process required for EVA implementation. As corporate house plans to move from traditional to value based performance measures, EVA would yield good result and the paper may become helpful to them to comprehend the methodology. Keywords: Value Based Performance Measure, Tailored EVA, Residual Income (RI), Accounting Distortions, Shareholders’ Value, Value Based Measure, Market Value Added, True EVA 1. Introduction Economic Value Added (EVA) is the financial performance measure that comes closer than any...
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...Life Span Development and Personality of Eva Peron Rhonda Hager PSY/300 June 18, 2012 Teresa Neal Life Span Development and Personality of Eva Peron Introduction Many factors influence the way a person will develop and the personality they will have. Scientists have long debated on the subject of heredity versus environment and how each effects the way a person develops. Different theories have also been discovered to explain a person’s personality. In this paper we will look at how heredity and environment played a role in the development of Eva Peron. We will also discuss how the different theories of personality explain the woman she became. Influences of Heredity and Environment Eva Peron was born on May 7, 1919 in Los Toldos, Argentina. Her mother, Juana Ibarguren, was the mistress of Juan Duarte, a local land owner. Juana had a large personality. She was the type of person who got what she wanted. She worked in the kitchen of the Duarte house and set her eyes on Juan Duarte. Not long after she became pregnant with her first child. It was not uncommon for men of means in Argentina to have mistresses; instead it was assumed that they would. Juan Duarte provided for Juana and her children to the extent that he could, while keeping them away from his wife and family. Eva was born into poverty and the entire family, mother and five children, shared a one room home (Barnes, 1935). Since she was not from the poorest class of people, her neighbors tended...
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...1 My name is Shane Johnson and I am the current P5 examiner, having previously been the Paper 3.3. examiner. 2 REVIEW OF PAST EXAMS Today I will review the first three diets under the current ACCA syllabus 3 WHAT WAS DONE WELL? 4 P5 - December 2007 Question 2 (b)(i) EVA Question 5(a) Porter’s five forces model Of course, under the current scheme of examinations P5 candidates have the benefit of having previously studied Paper P3 – Business Analysis and therefore any future P5 questions where there are overlaps between the two syllabi should produce acceptable answers Both EVA and Porter’s five forces model had been subject of articles in ‘Student Accountant’. 5 P5 - June 2008 Question 2 - Beyond Budgeting Question 4(a) (i) and (ii) – Statement of product profitability and commentary thereon Question 5 – Quality costs Beyond Budgeting: There were a large number of good solutions to this question involving the application of ‘beyond budgeting’ principles to a given scenario. This topic area which was examined under the previous syllabus (Paper 3.3) and was also the subject of an article in ‘Student Accountant’. Statement of product profitability: At this level one might expect candidates to be able to well prepare a statement of product profitability and to provide appropriate comments on such a statement. Quality costs This question was the least popular of the optional questions but was generally well answered 6 P5 - December 2008 ...
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...TOPICS IN MANAGEMENT ACCOUNTING AMIS 4310 Topics/Case Descriptions Measuring Product Costs Case: Seligram, Inc.: Electronic Testing Operations Case Description: Explores the obsolescence of a cost system when technology changes. In particular, it asks students to increase the number of cost centers and allocation bases. The firm moves from a one-center, direct labor-hour system to a three-center, direct labor-hour and machine-hour systems. In addition, the case demonstrates how cost systems can induce subtle and not so subtle shifts in the strategy of the firm. In particular, we see how certain businesses are made to look inappropriately attractive or unattractive. Cost Behavior, Capacity Analysis and the Downward Demand Spiral Case: Bridgeton Industries: Automotive Component & Fabrication Plant Case Description: Bridgeton Industries was experiencing reduced sales. To become more competitive it introduced a classification procedure for products based upon their productivity and other factors. Products were classified into three groups: world class, potentially world class, and non-world class. The firm outsources the non-world class products. This outsourcing causes the costs on the remaining products to increase because some fixed costs associated with the outsourced products did not go away. These residual costs caused more products to become non-world class and hence candidates for outsourcing...
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...TOPICS IN MANAGEMENT ACCOUNTING AMIS 4310 Topics/Case Descriptions Measuring Product Costs Case: Seligram, Inc.: Electronic Testing Operations Case Description: Explores the obsolescence of a cost system when technology changes. In particular, it asks students to increase the number of cost centers and allocation bases. The firm moves from a one-center, direct labor-hour system to a three-center, direct labor-hour and machine-hour systems. In addition, the case demonstrates how cost systems can induce subtle and not so subtle shifts in the strategy of the firm. In particular, we see how certain businesses are made to look inappropriately attractive or unattractive. Cost Behavior, Capacity Analysis and the Downward Demand Spiral Case: Bridgeton Industries: Automotive Component & Fabrication Plant Case Description: Bridgeton Industries was experiencing reduced sales. To become more competitive it introduced a classification procedure for products based upon their productivity and other factors. Products were classified into three groups: world class, potentially world class, and non-world class. The firm outsources the non-world class products. This outsourcing causes the costs on the remaining products to increase because some fixed costs associated with the outsourced products did not go away. These residual costs caused more products to become non-world class and hence candidates for outsourcing...
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...TOPICS IN MANAGEMENT ACCOUNTING AMIS 4310 Topics/Case Descriptions Measuring Product Costs Case: Seligram, Inc.: Electronic Testing Operations Case Description: Explores the obsolescence of a cost system when technology changes. In particular, it asks students to increase the number of cost centers and allocation bases. The firm moves from a one-center, direct labor-hour system to a three-center, direct labor-hour and machine-hour systems. In addition, the case demonstrates how cost systems can induce subtle and not so subtle shifts in the strategy of the firm. In particular, we see how certain businesses are made to look inappropriately attractive or unattractive. Cost Behavior, Capacity Analysis and the Downward Demand Spiral Case: Bridgeton Industries: Automotive Component & Fabrication Plant Case Description: Bridgeton Industries was experiencing reduced sales. To become more competitive it introduced a classification procedure for products based upon their productivity and other factors. Products were classified into three groups: world class, potentially world class, and non-world class. The firm outsources the non-world class products. This outsourcing causes the costs on the remaining products to increase because some fixed costs associated with the outsourced products did not go away. These residual costs caused more products to become non-world class and hence candidates for outsourcing...
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...Valareain P. has designed a piece of furniture that will add elegance and win hearts with its functionality. Christened EVA, it is a wall-mounted table that stands out with its bold designing and innovative features. The space-saving table has been dipped in modernism and will be perfect for a contemporary setup. The table measures 1.2 m by 0.6 m and will serve multiple purposes. EVA can be flexibly used as a work station and can also be exploited as a study table for writing or reading. The design features two drawers that can be used to store important papers, stationary, magazines and other items as per a user’s whims and fancies. It comes wedged with two source lighting that makes sure that the area remains illuminated and efficiency doesn’t get hampered by using the smart piece of furniture. The wooden furniture item will act as a perfect working space when the leaf is opened. As soon as the leaf is closed the same table will transform into a decorative stand or an area to stock things in no time. It will be a blessing for people who live in small houses as EVA will solve multiple purposes. The designer has tried to combine the charm of handcrafted things, modern looks and 3D forms in EVA, which makes it all the more eye catching. Simple facade and ease of use make EVA quite attractive. Just wedge it on any wall of your house or office and see it win hearts in a wink. April 10th, 2014. Furniture, A Warm Yet Peaceful Vilfred Desk To Support Your Privacy. Do you want...
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...Using EVA to Align Management Incentives with Shareholders’ Interests Incentive Compensation: The Need and the Challenge The objective of most incentive compensation programs is to address the ‘agency’ problems that besiege public companies. Specifically, public firms that hire professional management experience a natural separation between those that own the firm (the “principals”, i.e., shareholders) and those that manage the firm (the “agent”). Once can conclude that, for the vast majority of public firms, the owners’ ultimate goal is to maximize their own wealth invested in that firm. In most cases, the board that shareholders have elected to represent the owners’ interests hires professional managers to accomplish this goal for them. However, as Jensen and Meckling observed in a paper they co-authored in the mid-1970’s, without the proper incentives, most managers will not gravitate towards decisions that maximize firm wealth. Instead, the authors claim that managers with limited investment in the firm they have been hired to manage are inherently selfish. They will divert firm resources away from investments that create the most firm value towards those that bring the most value to the individual, such as perks, notoriety and empire-building. Jensen and Meckling proposed that the solution to this problem is to make the managers into owners by giving them equity and ultimately suggested that “the best way out of America’s corporatestructural rut was through...
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...The Case Study of Eva Airways Core Competencies in Airline Industry | December 252012 | The idea of "core competences" is one of the most important business ideas currently shaping our world. This is one of the key ideas that lies behind the current wave of outsourcing, as businesses concentrate their efforts on things they do well and outsource as much as they can of everything else. Eva Airways core competencies covers excellent flight safety record, advanced flight equipment to enhance flight safety, fleet complete, network-intensive services, caring and meticulous service that includes their current and future customer service programs, human capital investment for providing excellent customer service, and professional management. With these excellent customer-oriented services, Eva Air proves that they are already world-class air carrier and robustly have an edge to compete in international market with the low-cost airline carrier, prestige airline carrier, and even the government-controlled carrier. We also believed that Eva Air’s customer-oriented services (core competencies) could sustain the growing or future demands in airline industry and can survive the toughness of the competition. The Case Study of Eva Airways Core Competencies in Airline Industry I. INTRODUCTION The airline industry exists in an intensely competitive market. Over the years, air travel has become so commonplace that it would be hard to imagine life without it. The airline industry, therefore...
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...financial manager of Ski Equipment Inc. (SKI), is excited, but apprehensive. The company's founder recently sold his 51% controlling block of stock to Kent Koren, who is a big fan of EVA (Economic Value Added). EVA is found by taking the net operating profit after-tax (NOPAT) and then subtracting the dollar cost of all the capital the firm uses: EVA = NOPAT – Capital costs = EBIT(1 – T) – WACC (Total capital employed). If EVA is positive, then the firm is creating value. On the other hand, if EVA is negative, the firm is not covering its cost of capital and stockholders' value is being eroded. Koren rewards managers handsomely if they create value, but those whose operations produce negative EVAs are soon looking for work. Koren frequently points out that if a company can generate its current level of sales with fewer assets, it would need less capital. That would, other things held constant, lower capital costs and increase its EVA. Shortly after he took control of SKI, Kent Koren met with SKI's senior executives to tell them of his plans for the company. First, he presented some EVA data that convinced everyone that SKI had not been creating value in recent years. He then stated, in no uncertain terms, that this situation must change. He noted that SKI's designs...
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...resources. Value can be viewed as maximizing wealth of shareholders, and or improving the quality of life. The desire for businesses to generate value has resulted in using and developing different performance measurement, sometimes centered on the wrong financial measurement, and strategy. Businesses today only look cash strategies, and sometimes operational goals, and ignore the main reason for existence, which results in rewarding employees and even management for the wrong achievement instead of procedures and strategies that actually added value to the business. If the main goal is to generate value then, it follows that measuring performance must be geared toward this, and not solely on profitability. This paper will discuss the importance Economic Value Added (EVA) in measuring performance of a business. It will also look at how it is calculated and possible disadvantages Definition and History It is normally to see many businesses use the profit base measurement as their primary measure of evaluating the performance of its organization, however, this approach ignores the cost of equity capital, and only concentrate on the cost of debt used to finance operations. Secondly, profits to do not wholly reflect the wealth that a business has created, and lastly profits can actually be manipulated by accountants and managements. These flaws gives the need for a better performance evaluation tool, that takes into account both debts and equity,...
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...pursue a social objective. Social entrepreneurs adopt a mission to create and sustain social value and private value; recognizing and relentlessly pursuing new opportunities to serve that mission; engaging in a process of continuous innovation; adaptation; and learning; acting boldly without being limited by resources currently in hand; and exhibiting a heightened sense of accountability to the constituencies served and for the outcomes created. This paper attempts to understand the success factors of one such young and enthusiastic social entrepreneur. 1.0 INTRODUCTION 1. Background of Entrepreneur [pic] [pic] Eva Wong Siao Yen is a young and enthusiastic social entrepreneur born on 23rd September, 2008. Eva is the founder of Happyland Special Edu Centre. She was born in the year 1978. She is the only child in the family. Her parents both came from a very reputable family, with strong emphasis on education. The father came from Pahang and the mother came from Sarawak. Ms. Eva was born in Sarawak. The parents moved from Sarawak to Johor Bahru to start a new life, and had to start...
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...1.0 BACKGROUND In assignment 2, I was assigned to find the relationship between Free Cash Flow (from now on refer as FCF), Economic Value Added (from now on refer as EVA) and Market Value Added (from now on refer as MVA), specifically whether a company with high FCF also have high EVA and MVA. Explanation using empirical evidence is also needed to support my reasoning and arguments. Therefore, in order to complete this assignment, I have used a few types of references which are financial management reference books, journals, articles from Fortune magazine and set-up an interview with Mr. Amiruddin b. Abdul Shukor which is the Chief Financial Officer (CFO) for Nationwide Express Courier Services Berhad. Throughout his career, he had worked in Permodalan Nasional Berhad (PNB), Permodalan Terengganu Berhad (PTB), Securities Comission Malaysia (SC) and Malaysian Industrial Development Finance Berhad (MIDF). An interview session was set with him on 2/12/2011 at his office in the headquarters of Nationwide Express Courier Services Berhad in Shah Alam, Selangor. 2.0 FINDINGS 2.1 Free Cash Flow In definition, FCF is the cash flow actually available for distribution for investors after the company has made all the investment in fixed assets and working capital necessary to sustain ongoing operations (Brigham & Ehrhardt, 2005). Basically, the formula for FCF is as follows: In the investors’ perspective, positive value of FCF is more favorable than negative value because...
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...Final Essay This paper will give a brief critique of the articles that have been provided. Every article will be summarized with the main points of the article examined, and the overall significance of the article appraised. By doing this, it will be possible to read this paper and obtain a general feel for all the articles the have been provided. WHAT DO WE EXPERIENCE IF WE HAVE RELIGIOUS EXPERIENCE? By Peter Antes. This article looks at why people who have religious experiences never “...saw a person who was totally unknown in the respective religious context where the apparition took place.” (Antes 3). Why don’t people ever see the God(s) from other religions, why do some people “...see Kali or Durga, while in Christian contexts, if the vision is that of a woman, St. Mary is seen instead.” (Antes 3). This thesis is rather profound in the fact that almost every religion claims to have religious experiences and divine visions, but never of the God(s) from other religions. An interesting contrast shown in the body of the article is between Madeleine Le Bouc, and Ramakrishna. The former, was said to be quite mad by Doctor Pierre Janet while the ladder was considered a saint. Antes points out that “...they had similar types of experience which, according to their surrounding milieus, found very different explanations: a medical one in terms of mental illness in the secular context of France, and a religious one in the Indian context of Hindu spirituality.” (Antes 2). By using...
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...Pick-n-Pull Value Analysis ######### ############### Healthcare Financial Management ############## June 2013 Executive Summary This paper discusses the EVA analysis of Schnitzer Steel Industries and Pick-n-Pull Auto Dismantling Inc. as both a part of Schnitzer Steel Industries and as a stand alone company. Pick-n-Pull is better served as an individual company. As their own entity, Pick-n-Pull would be able to grow its number of locations, sell their scrap car bodies to the highest bidder and expand into additional markets without having to seek permission and wait for approval for funds from Schnitzer Steel. This paper shows the reasons that in my opinion Pick-n-Pull would be a much better investment as its own company without Schnitzer Steel’s ownership. Established in 1987, Pick-n-Pull Auto Dismanteling, Inc. (PNP) is a chain of self-service auto parts stores and is one of the largest recyclers of end-of-life vehicles in the industry. They have 61 locations currently in the United States and Canada and while many other companies are closing location, they are continuing to grow. The basis for the retail portion of their operation is simple customers pay their admission to the yard (admission prices vary by yard location), bring their tools and remove the parts that they need for their cars, vans and trucks foreign and domestic at a fraction of the price they would pay a dealership or even an automotive repair business. Pick-n-Pull keeps an online inventory...
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