Subject category:
Finance, Accounting and Control
Published by:
IBS Center for Management Research
Length: 15 pages
Data source: Published sources
Topics:
Godrej Consumer Products Limited; Economic value added (EVA); Deployment of EVA framework; Maximising shareholder's wealth; EVA in fast moving consumer goods industry (FMCG); FMCG industry in India; Calculation of EVA; Capital assets pricing model; Approaches to calculate capital employed; Scorpio; Commercial vehicles; Innovations in road transportation industry
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https://casecent.re/p/19437
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Abstract
The case discusses the implementation of the economic value added (EVA) framework in Godrej Consumer Products Limited (GCPL), a leading fast moving consumer goods company in India. It covers in detail the reasons for implementing the EVA framework in GCPL and the benefits derived by the company after its implementation. The case then examines the link between the implementation of the EVA framework and improvement in the financial performance of a company. It ends with a debate on the effectiveness of EVA and highlights its limitations. The case is designed to help students critically analyse the concept of EVA, its benefits and drawbacks. While the students are expected to develop a better knowledge of EVA as a financial concept, they should essentially develop a general understanding of the following major issues: (1) the significance of the EVA framework for a company; (2) EVA as a measure to determine the financial health of a company; (3) the benefits and drawbacks of EVA implementation; (4) calculation of EVA and the underlying assumptions; and (5) the relationship of EVA with the capital asset pricing model (CAPM). The case is intended for MBA/PGDBM level students as part of the finance curriculum.
About
Abstract
The case discusses the implementation of the economic value added (EVA) framework in Godrej Consumer Products Limited (GCPL), a leading fast moving consumer goods company in India. It covers in detail the reasons for implementing the EVA framework in GCPL and the benefits derived by the company after its implementation. The case then examines the link between the implementation of the EVA framework and improvement in the financial performance of a company. It ends with a debate on the effectiveness of EVA and highlights its limitations. The case is designed to help students critically analyse the concept of EVA, its benefits and drawbacks. While the students are expected to develop a better knowledge of EVA as a financial concept, they should essentially develop a general understanding of the following major issues: (1) the significance of the EVA framework for a company; (2) EVA as a measure to determine the financial health of a company; (3) the benefits and drawbacks of EVA implementation; (4) calculation of EVA and the underlying assumptions; and (5) the relationship of EVA with the capital asset pricing model (CAPM). The case is intended for MBA/PGDBM level students as part of the finance curriculum.