Thesis (MEng)--University of Stellenbosch, 2000. / ENGLISH ABSTRACT: The age old principle of earnings exceeding the cost of capital as a sound basis of wealth
creation has been re-packaged and to a large extent, prominently revived, by the Stern
Stewart Consultancy of New York in the form of EVA (economic value added).
The most well know application of EVA for the past 10 years and subsequent success has
been with the global company, Coca Cola.
However, the widely debated capital asset pricing model - with no conclusion in site - is
used as the basic principle in calculating EVA and therein lies one of its many weaknesses.
All aspects of measurement is the foundation on which Industrial Engineering is based.
This dissertation set out to evaluate this financial measurement and / or measure in terms of;
a) an ability to replace any existing financial ratios
b) an ability to measure wealth creation
c) an ability to influence or improve on manufacturing systems such as JIT (Just-In-
Time) or TOC (Theory of Constraints).
d) an ability to focus on the productive use of capital and lastly
e) an ability to point towards failure of a business when realising a low or negative
EVA
On a comparison with the traditional financial measurement techniques and ratios the EVA
concept shows too strong a correlation to render it "unique" or able to replace EPS (earnings
per share) as the single most important indicator in the financial markets.
There is also the interesting phenomenon that industrial sectors vary significantly from
country to country in their ability to earn over and above their cost of capital and that being
the case in EVA terms, the question is raised whether those countries with negative EVA
industrial sectors, should consider moving out of those businesses.
The EVA calculations consist of reducing a company's annual earnings with its total weighted
average cost of capital and a positive result is stated as a sign of "wealth creation" whereas a
negative result points to the destruction of wealth. As will be seen in this dissertation, the EVA measure is healthy as to focussing on the
"hurdle" effect of the cost of capital but that the world consists of many organisations with low
or negative EVA that have been successfully doing business and producing profits for many
years. / AFRIKAANSE OPSOMMING: Die eeu oue beginsel dat inkomste die koste van kapitaal moet oorskry vir 'n grondige basis
om rykdom te skep, is herverpak en tot In groot mate, uitstekend vernuwe deur Stern
Steward Consultancy van New York in die vorm van ETW (ekonomiese toegevoedgde
waarde [EVA)).
Die mees bekende toepassing van ETW die afgelope 10 jaar asook die gevolglike sukses
daarvan is op die internasionale maatskappy, Coca Cola.
As gevolg van die feit dat die onvoltooide debat rondom die kapitale bates prysmodel as
beginsel gebruik word in die berekening van ETW, is die waarde van die ETW maatstaf
dienooreenkomstig verswak.
Die aspek van maatstawwe of meting is een van die hoekstene van Bedryfsingenieurswese.
Hierdie tesis het dan dit ten doel gestelom hierdie ETW maatstaf te evalueer in terme van;
a) 'n vermoë om enige bestaande finansiële verhouding te vervang
b) veral die vermoë om die skep van rykdom aan te dui
c) 'n vermoë om 'n invloed te hê, of selfs verbeterings aan te bring aan moderne
vervaardiging stelsels soos .HT (Knapbetyds) of TOC (sinkrone vervaardiging)
d) 'n vermoë om die produktiewe gebruik van kapitaal te meet en
e) 'n vermoë om aan te dui of 'n onderneming gaan faal as gevolg van 'n lae of
negatiewe ETW waarde.
In vergelyking met die tradisionele finansiële maatstawwe en verhoudings, wys die ETW
konsep 'n te sterk ooreenkoms met bogenoemde om dit as uniek te beskryf of om VPA
(verdienste per aandeel [EPS)) as die belangrikste aanwyser van die finansiële markte te
vervang.
Daar is ook die interessante verskynsel dat industriële sektore beduidend verskil, van land
tot land, in hulle vermoë om hoër as die koste van kapitaal te verdien en indien dit die geval
is met ETW, moet die vraag gevra word of hierdie lande wat negatiewe ETW industriële
sektors het, nie daaraan moet dink om daardie besighede te sluit nie. Die ETW berekenings bestaan uit die verlaging van 'n maatskapy se jaarlikse inkomste. Die
totale gewig is die koste van kapitaal wat indien positief 'n teken is dat "rykdom" geskep word
en indien negatief dat rykdom vernietig word.
In hierdie tesis sal die volgende aan die ligkom: die ETW maatstaf is goed in die sin dat dit
fokus op die "drumpel"-effek van koste van kapitaal; die wêreld bestaan egter uit baie
organisasies wat In lae of negatiewe ETW het, maar wat baie jare suksesvol besigheid doen
en wins lewer.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/51604 |
| Date | 12 1900 |
| Creators | Ruthven, George A |
| Contributors | Von Leipzig, K., Stellenbosch University. Faculty of Engineering. Dept. of Industrial Engineering. |
| Publisher | Stellenbosch : Stellenbosch University |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | English |
| Type | Thesis |
| Format | 1 v. (various pagings) : ill. |
| Rights | Stellenbosch University |
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