Economic Value Added and Its Benefit for Owners and Managers of Czech Companies

Owners and managers influence the business of the acounting entity through the strategic management. Among others they use absolute performance synthetic criterion of managerially measured profit (so-called Economic Value Added) and call for its value higher than zero, because the property of owners is higher in these companies. The construction of financial criterion Economic Value Added must solve such questions as for example how correctly to measure the investment capital and capital costs or how to eliminate short-term time horizon connected with the measurement of this criterion. Economic Value Added should present the important tool of the transformation of strategic targets of the Czech company on tactical time periods and on lower structural levels of investment and rentability responsibility centres. Then Economic Value Added should serve as one of criterion of investment decision and as criterion of the appraisal of managerial work, because managers are responsible for the main entrepreneurial (operating) activity or its part. However Economic Value Added is often determined for some Czech companies externally, for instance for daughter companies by their mother company.