Journal of Commerce and Accounting Research

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A Comparative Analysis of EVA & MVA Approach: With Special Reference to Automobile Industry


Affiliations
1 Indore Institute of Science and Technology (IIST), DAVV University, Indore, Madhya Pradesh, India
2 Amity Global Business School, Indore, Madhya Pradesh, India
3 Indore Institute of Science and Technology, Madhya Pradesh, India
     

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The development of the capital market in India, both in strength and size along with the inflamed consciousness among the shareholders, have compelled the companies to consistently enhance the performance. There has been a swelling concern about the performance measures based on traditional accounting information such as Return on Equity (ROE), Earning per Share (EPS), Net Operating Profit after Taxes (NOPAT) and Return on Investment (ROI) etc. These measures, even though widely used, fall short to incarcerate the shareholders’ value Creation/Destruction as anoutcome of management actions. EVA and MVA are the two different approaches to measure the existing financial status and predicting the future performance of the company. The present study is an attempt to determine the financial performance of chosen automobile companies in India and position them based on their mean EVA and MVA for the tenure of 5 years from 2006 to 2010.

Keywords

ROE, EPS, NOPAT, ROI, EVA and MVA.
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  • A Comparative Analysis of EVA & MVA Approach: With Special Reference to Automobile Industry

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Authors

Simranjeet Kaur Sandhar
Indore Institute of Science and Technology (IIST), DAVV University, Indore, Madhya Pradesh, India
Simple Verma
Amity Global Business School, Indore, Madhya Pradesh, India
Dheeraj Nim
Indore Institute of Science and Technology, Madhya Pradesh, India

Abstract


The development of the capital market in India, both in strength and size along with the inflamed consciousness among the shareholders, have compelled the companies to consistently enhance the performance. There has been a swelling concern about the performance measures based on traditional accounting information such as Return on Equity (ROE), Earning per Share (EPS), Net Operating Profit after Taxes (NOPAT) and Return on Investment (ROI) etc. These measures, even though widely used, fall short to incarcerate the shareholders’ value Creation/Destruction as anoutcome of management actions. EVA and MVA are the two different approaches to measure the existing financial status and predicting the future performance of the company. The present study is an attempt to determine the financial performance of chosen automobile companies in India and position them based on their mean EVA and MVA for the tenure of 5 years from 2006 to 2010.

Keywords


ROE, EPS, NOPAT, ROI, EVA and MVA.

References