Evaluation of Financial Performance of Selected Company Using Economic Value Added Indicator

Yan Hu

Master's thesis

Abstract:

In order to assess the investment potential of a company in the coming years, a thorough analysis and forecast of its past financial performance is imperative. The objective of this thesis is Nintendo Co., Ltd., utilizing financial data spanning from 2011 to 2022. The methodology employed is the economic value added (EVA) method, a widely recognized and applicable method for evaluating and predicting a company's financial performance. Through meticulous computations, it has been determined that Nintendo's EVA value has negative value from 2012 to 2015, grown significantly since 2017 after turning a profit. Moreover, projections indicate a continued upward trajectory in the foreseeable future. Notably, sales and research and development (R&D) expenses emerge as key indicators that significantly impact the EVA of the company. The positive growth trend of the EVA value signifies Nintendo's ability to create value and generate wealth for its shareholders in a sustainable manner. However, it is crucial for the company to remain vigilant and proactive in order to sustain its financial performance in the future. In conclusion, the findings of this study highlight Nintendo's favorable EVA performance, while underscoring the need for continuous monitoring and strategic management to ensure its continued success in the years ahead.In order to assess the investment potential of a company in the coming years, a thorough analysis and forecast of its past financial performance is imperative. The objective of this thesis is Nintendo Co., Ltd., utilizing financial data spanning from 2011 to 2022. The methodology employed is the economic value added (EVA) method, a widely recognized and applicable method for evaluating and predicting a company's financial performance. Through meticulous computations, it has been determined that Nintendo's EVA value has negative value from 2012 to 2015, grown significantly since 2017 after turning a profit. Moreover, projections indicate a continued upward trajectory in the foreseeable future. Notably, sales and research and development (R&D) expenses emerge as key indicators that significantly impact the EVA of the company. The positive growth trend of the EVA value signifies Nintendo's ability to create value and generate wealth for its shareholders in a sustainable manner. However, it is crucial for the company to remain vigilant and proactive in order to sustain its financial performance in the future. In conclusion, the findings of this study highlight Nintendo's favorable EVA performance, while underscoring the need for continuous monitoring and strategic management to ensure its continued success in the years ahead.

Abstract:

In order to assess the investment potential of a company in the coming years, a thorough analysis and forecast of its past financial performance is imperative. The objective of this thesis is Nintendo Co., Ltd., utilizing financial data spanning from 2011 to 2022. The methodology employed is the economic value added (EVA) method, a widely recognized and applicable method for evaluating and predicting a company's financial performance. Through meticulous computations, it has been determined that Nintendo's EVA value has negative value from 2012 to 2015, grown significantly since 2017 after turning a profit. Moreover, projections indicate a continued upward trajectory in the foreseeable future. Notably, sales and research and development (R&D) expenses emerge as key indicators that significantly impact the EVA of the company. The positive growth trend of the EVA value signifies Nintendo's ability to create value and generate wealth for its shareholders in a sustainable manner. However, it is crucial for the company to remain vigilant and proactive in order to sustain its financial performance in the future. In conclusion, the findings of this study highlight Nintendo's favorable EVA performance, while underscoring the need for continuous monitoring and strategic management to ensure its continued success in the years ahead.

Keywords

financial performance, economic value added, Monte Carlo simulation, cost of capital, return on invested capital

Keywords

financial performance, economic value added, Monte Carlo simulation, cost of capital, return on invested capital

Language used: English

Date on which the thesis was submitted / produced: 21. 4. 2023

Thesis defence

• Date of defence: 22. 5. 2023
• Supervisor: Petr Gurný
• Reader: Aleš Kresta

VSB – Technical University of Ostrava

Ekonomická fakulta

Master programme:
Finance