| Abstract [eng] |
Relevance. Practical application of EVA began only in the late XX 9th. EVA target opportunities in companies financial analysis is quite broad. Unlike other traditional accounting profit based indicators EVA measures not a quantity but a quality of a profit, and it is important to companies that focus on shareholder value creation, because the fact that the company earns huge profits does not mean that their profits are reasonable and will add value. However, the authors who analyze EVA‘s usefulness and significance to value performance of the companies are discovering many objections. One of it is the necessity and need of the recommended accounting adjustments. Those adjustments transform accounting profit closer to economic profit, which evaluates not only the income and expenses, but also alternative costs. However, many studies have been done that are contrary to the claim that these adjustments provide additional information about EVA indicator. Found that firms are reluctant to use adjustments, since they are quite expensive, labor-intensive, workers and customers find it difficult to understand, so it makes EVA more complex. Therefore it is important to determine what impact these accounting adjustments have to EVA, because when it is known, each company can decide to perform it or not. Object – calculated recommended EVA accounting adjustments. Target - to evaluate recommended accounting adjustments significance EVA value. Main tasks: 1. To disclose the concept of the economic value added, to identify the usage possibilities and advantages compared with other indicators. 2. To study basic recommended EVA accounting adjustments to determine their significance and influence to net operating profit after tax NOPAT and invested capital. 3. To analyze and classify carried out EVA studies so that to determine the direction of future research. 4. To calculate and compare EVA values with and without recommended accounting adjustments, with separate and all adjustments, to identify how EVA have changed in analyzed companies. 5. To determine what the size of the recommended accounting adjustments should be to have a significant impact to EVA change. Results. After analyzing 33 Lithuanian companies EVA values with every accounting adjustment separately and compared EVA without adjustments made, the results shows the biggest change in EVA value was after advertising, research and education adjustments 40,31%. Also significance change was after deferred taxes adjustment - 17,96%. It is also the only adjustment which reduced EVA value. 14,74% EVA value changed after receivables depreciation costs adjustments. Very similar EVA change 10,53% was after inventory depreciation cost recovery. Adjusted provision, reserves, goodwill costs changed EVA on average 6,67%. Finally the smallest impact to EVA value had operating leasing costs adjustment only 0,51%. Moreover after the research made, the conclusion is that whatever adjustment will have significant impact to EVA or not depends on the amount of the adjustment costs. So the decision to make recommended adjustments or not depends on what change of EVA is significant to the company and what the amount of the adjustment is. After dividing the change of EVA into four groups ranges 1-5%, 5-10%, 10-20% and more than 20%, the average amounts of the adjustments to influence those changes were identified (the result are in table 8). |
