Document from the year 2011 in the subject Business economics - Business
Management, Corporate Governance, Post Graduate Government College
(PGGC-46, Chandigarh), course: Commerce, language: English, abstract:
Moullin defined performance measurement as, "Performance measurement is
evaluating how well organizations are managed and the value they deliver
for customers and other stakeholders". According to Kelvin, 'When you
can measure what you are speaking about and express it in numbers, you
know something about it'. According to Anon, 'You cannot manage what you
cannot measure'. The Economic Value Added (EVA) framework developed by
the Stern Stewart & Company is gradually replacing the traditional
measures of financial performance due to its robustness and its immunity
from "creative accounting". Fortune magazine has called it "today's
hottest financial idea and getting hotter" and management guru Peter
Drucker referred to it as a measure of total factor productivity. The
traditional measures for performance measurement, suffer from some
serious limitations which are the main reason that these traditional
methods based on earnings can't be used as a reliable measure of
performance measurement. Hence, there is the need of new approaches for
the performance measurement which takes stakeholder's perspective into
consideration and shareholders wealth into consideration. EVA is a
better performance measurement tool and it has been proved in the
research done on 10 companies in India. EVA has been compared with
traditional techniques like ROI, ROE, EPS, NVA and MVA and the results
are presented. Suggestive measures have also been given at the end and
reference tables are also given. The research will e beneficial for
academicians and people associated with finance.
