Evaluation of economic value added as an effective tool to run the value-oriented management system

Abstract

Shareholders always seek criteria based on which they could evaluate company's performance in order to value creation. A suitable criterion to evaluate performance should be related to shareholders on one hand and their ability to determine the value created for them on the other hand. Achieving such a criterion together with growth in management system is introduced based on value. There are several tools to run value added management system among which economic value added and market value added can be mentioned. Economic value added is a suggested value to evaluate performance of the commercial unit and an indicator for creating value derived from performance. Value added more than any other criteria is related to the real financial benefit and is considered as the best criteria to create shareholders' value,