Author(s)

Li Dongxiao ¹

Affiliation(s)

¹ Department of Management, Hebei University of Geosciences, Shijiazhuang, China

Corresponding Author

Li Dongxiao

ABSTRACT

This study evaluates the financial performance of Company C, a leading Chinese home appliance manufacturer, using the Economic Value Added (EVA) framework to address limitations of traditional accounting metrics. By calculating key EVA components—Net Operating Profit After Tax (NOPAT), Total Capital (TC), and Weighted Average Cost of Capital (WACC)—from 2018 to 2023, the research reveals significant discrepancies between EVA and conventional indicators (ROA, ROE, net profit growth). Despite rising accounting profits, Company C's EVA remains negative in most years, indicating value destruction due to indicating value destruction due to unaccounted equity capital costs and inefficient resource allocation. Core issues include imbalanced capital structure, high R&D investment risks, and suboptimal cost control. The analysis highlights EVA's superiority in capturing true economic value compared to profit-centric metrics. Recommendations focus on optimizing debt-equity ratios, enhancing R&D efficiency, strengthening cost management, and aligning strategies with market trends to foster sustainable value creation. This research contributes to refining performance evaluation systems in the home appliance industry and beyond.

KEYWORDS

EVA, Financial performance, Capital structure optimisation

CITE THIS PAPER

Li Dongxiao, Evaluation of Corporate Financial Performance from an EVA Perspective: A Case Study of Company C. Accounting and Corporate Management (2025) Vol. 7: 6-13. DOI: http://dx.doi.org/10.23977/acccm.2025.070202.

REFERENCES

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[2] Behera. S. Does EVA valuation model outperform earnings valuation model in explaining market value of equity?[J]. International Journal of Finance ;Economics, 2020. 
[3] Wei Yimin. Performance evaluation analysis and its application based on EVA perspective--Taking Qingdao Haier as an example[J]. Research on Finance and Accounting, 2018, (11):36-41. 
[4] Wang Tao. Yunnan Baiyao enterprise value assessment based on EVA[J]. Hebei enterprise, 2019, (01):25-26. 
[5] Deng Yannan. Research on the Value Assessment of High-tech Enterprises Based on EVA Model--Taking Gree Company as an Example[J]. Small and Medium-sized Enterprises Management and Science and Technology (Zhongdian), 2021, (10):161-163.  
[6] Liu Yuchen, He Yu, Zhu Jiayao, et al. The application of EVA in the evaluation of corporate performance--Taking BYD as an example[J]. Journal of Economic Research, 2020, (34):4-7.

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