It is a business performance assessment tool that evaluates the ability of business operators to effectively use capital and create value for shareholders, and reflects the ultimate business goals of the company.

Economic value added = adjusted after-tax operating profit - weighted average capital cost × adjusted net investment capital, after-tax net operating profit = net profit + (interest expense + research and development expense adjustment item) × (1-25%),

The English abbreviation EVA of economic value added refers to the income obtained after deducting the cost of all invested capital including equity and debt from the net operating profit after tax. Its core is that capital investment has a cost, and a company will create value for shareholders only when its profit is higher than its capital cost (including equity cost and debt cost).

1. Accounting adjustment,

Net operating profit after tax (NOPAT) = operating profit + financial expenses + bad debt provisions accrued in the current year + inventory devaluation provisions accrued in the current year + The long-term and short-term investment impairment provisions made in the current year + the entrusted loan impairment provisions made in the current year + investment income + futures income - EVA tax adjustment

EVA tax adjustment = income tax on the income statement + tax rate × (financial Expenses + non-operating expenses - fixed assets/intangible assets/projects under construction - non-operating income - subsidy income),

Debt capital = short-term borrowings + long-term borrowings due within one year + long-term borrowings + bonds payable ,

Equity capital = total shareholders’ equity + minority shareholders’ equity,

Equivalent equity capital = bad debt provision + inventory depreciation provision + long-term and short-term investment |/entrusted loan impairment provision + Provision for impairment of fixed assets/intangible assets,

Calculate the capital of EVA = debt capital + equity capital + equivalent equity capital - net value of construction in progress,

2. Calculation of capital cost rate ,

Weighted average cost of capital = debt capital cost rate × debt capital/(equity capital + debt capital) × (1-tax rate) + equity capital cost rate × [equity capital/equity capital + debt capital) 〕,

That is, WACC=(Debt/(Debt+Equity))*(1-taxrate)*rdebt+(Equity/(Equity+debt))*requity,

3. Debt capital cost rate,

3 to 5-year medium and long-term bank loan benchmark interest rate (6.65%),

4. Equity capital cost rate = risk-free rate of return,

+BETA coefficient × (market risk premium), that is, equity=rf+beta*MRP,

5. Risk-free rate of return calculation,

Shanghai Stock Exchange trading The annual yield on the longest-term government bond that year was 20 years, 3.25%, and the market risk premium was calculated at 4%.

6. BETA coefficient calculation,

The daily value can be calculated by regressing the company's stock return rate on the stock market index (Shanghai Composite Index) return rate in the same period.