Evaluation of Financial Performance of a Steel Company Using Economic Value Added

Abstract

The financial performance and financial stability of the business is one of the main points a company should focus on. Regular assessment of the financial health of the firm helps to identify and determine the problems within that firm and its management. Economic value added (EVA) is one of the modern indicators which is widely used as the main tool for financial analysis. The aim of this diploma thesis is the assessment of financial performance of a steel company using modern method EVA. Accounting data were converted into economic, economic value added was measured and pyramidal decomposition of EVA indicator performed. The thesis found that EVA was negative during three out of four years of the selected period which means that analyzed company didn’t create any economic added value for the owners even though there was accounting profit reported those years. Economic value added was positive only in one year.