Taking EVA downwards

• EVA is not even near as powerful as it could be if the consept is not in use at the operating level of the organisation (at the worst case financial department makes EVA-calculations for upper management and the consept is not used elsewhere in the organisation)
• EVA is powerful at operational level to illustrate the costs of working capital (inventories, sales receivables etc.) and therefore particularly operating employees (sales people, operating engineers etc.) are in a key position in this context
  • Often EVA approach helps in opening the eyes of operating employees to see how costly capital is and thereafter the working capital can usually be reduced without a similar reduction in revenues (or increase in other costs)
• Using EVA in day-to-day operational activities means that all the actions can be quite easily converted into EVA-changes and thus employees would be able to know how to improve EVA
• EVA can be also calculated by products and by customers

Slide 4 of 5