Practical knowledge has inestimable value for a student because a theoretical knowledge in incomplete if it is not correlated with the practical knowledge. The work and experience gained during training period has increased my knowledge many folds.
In this limited space a brief and comprehensive account has been produced in the light of recent work done on calculation of Economic value added at RSMML through latest information available from various sources.
The most important task of a financial manager is to interpret the financial results in such a manner that it can be clearly understood and also provides favorable and satisfactory information to shareholders. The techniques by which it is so done is known as Economic value added.
Bennet Stewart shows is a method measuring the value of a company in any given year with a concept call ECONOMIC VALUE ADDED. EVA basically the difference between operating profit and the cost of capital employed any year that a company is in business and generates more operating profit that’s its capital charge, it is creating economic value.
While calculating EVA I have made use of past 5 years balance sheet, profit &loss account and annual report of company. At present RSMML is not calculating EVA but with cooperation of the organization I have made an effort to prove EVA as one of the efficient & effective tool to concentrate on maximization of shareholders wealth as it increase their faith in the company thereby increasing good well of the company.
For the purpose of calculating EVA I have calculated
Weighted average cost of capital
Cost of equity
. Cost of debenture
. Cost of reserves and surplus
. Cost of secured and unsecured loans
NOPAT which means deduction of interest cost from the profit after tax
Finally with the help of NOPAT and weighted average cost of capital EVA of the organizations is calculated.
MY findings shows that in the beginning year the company had a negative EVA but in the current year the company the company has positive EVA which shows that the company is giving due importance to its shareholders through maximization of these wealth.
My study reveals that the current performance of the organization is satisfactory This not only means that RSMML is only a profit making organization but its efforts also deductible to work in favour of its shareholders which is best proved with the help of EVA At least I would like to suggest the organizations to adopt this best performance measuring and controlling tool.
In this limited space a brief and comprehensive account has been produced in the light of recent work done on calculation of Economic value added at RSMML through latest information available from various sources.
The most important task of a financial manager is to interpret the financial results in such a manner that it can be clearly understood and also provides favorable and satisfactory information to shareholders. The techniques by which it is so done is known as Economic value added.
Bennet Stewart shows is a method measuring the value of a company in any given year with a concept call ECONOMIC VALUE ADDED. EVA basically the difference between operating profit and the cost of capital employed any year that a company is in business and generates more operating profit that’s its capital charge, it is creating economic value.
While calculating EVA I have made use of past 5 years balance sheet, profit &loss account and annual report of company. At present RSMML is not calculating EVA but with cooperation of the organization I have made an effort to prove EVA as one of the efficient & effective tool to concentrate on maximization of shareholders wealth as it increase their faith in the company thereby increasing good well of the company.
For the purpose of calculating EVA I have calculated
Weighted average cost of capital
Cost of equity
. Cost of debenture
. Cost of reserves and surplus
. Cost of secured and unsecured loans
NOPAT which means deduction of interest cost from the profit after tax
Finally with the help of NOPAT and weighted average cost of capital EVA of the organizations is calculated.
MY findings shows that in the beginning year the company had a negative EVA but in the current year the company the company has positive EVA which shows that the company is giving due importance to its shareholders through maximization of these wealth.
My study reveals that the current performance of the organization is satisfactory This not only means that RSMML is only a profit making organization but its efforts also deductible to work in favour of its shareholders which is best proved with the help of EVA At least I would like to suggest the organizations to adopt this best performance measuring and controlling tool.
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