文档介绍：本科毕业论文(设计)
外文翻译
原文:
Economic Value Added - A General Perspective
Performance Measurement
Investors measure overall performance of a firm as a whole to decide whether to invest in the firm or to continue with the firm or to exit from it. In order to achieve goal congruence, managers’ compensation is often linked with the performance of the responsibility centers and also with firm-performance. Therefore selection of the right measure is critical to the ess of a firm. To measure performance of a firm we need a simple method for correctly measuring value created/ enhanced by it in a given time frame. All the current metrics trade off between the precision in measuring the value and its cost of measurement. In other words, each method takes into consideration the degree plexities in quantifying the underlying measure. The plex is the process, the more is the level of subjectivity and cost in measuring the performance of the firm.
There is a continuous endeavor to develop a single measure that captures the overall performance, yet it is easy to calculate.
Each metric of performance claims its superiority over others. Performance of a firm is usually measured with reference to its past record and the performance of other firms parable risk profile. The various performance metrics currently in use are based on the returns on investment generated by the business entity . Therefore to reach a meaningful conclusion, returns generated by the firm in a particular year should pared with returns generated by assets with similar risk profile (cross sectional analysis)
Similarly return on investment for the current period should pared with returns generated in past (time series analysis). A firm creates value only if it is able to
generate return higher than its cost of capital. Cost of capital is the weighted average cost of equity and debt ().
The performance of a firm gets reflected on its valuation by the capital market. Market valuation reflects investor’s percepti