This paper examines the application of the increasingly popular economic value added (EVA) and cash value added (CVA) measures of financial performance of private and publicly-traded firms. EVA and CVA are measured for a sample of Polish firms. Since traditional accounting measures are not robust indicators of corporate performance of firms in transitional economies, these alternate measures provide better assessment of value/cash flow creation and solvency. The results suggest that Polish firms, though reportedly making accounting profits, are indeed unable to generate value to shareholders. Further, the cash flow measures indicate a great deal of solvency risk. Thus, we recommend the use of these EVA and CVA measures for evaluating performance of companies, especially, in transitional economies.
Urbanczyk, Edward; Midoduchowska-Jaroszewicz, Edyta; and Szczesna-Urbaniak, Agnieszka
"Economic value added versus cash value added: The case of companies in transitional economy, Poland,"
International Journal of Banking and Finance:
1, Article 8.
Available at: http://epublications.bond.edu.au/ijbf/vol3/iss1/8