THE ECONOMIC VALUE ADDED ALGORITHM RISKS IN THE CONTEXT OF CORPORATE PERFORMANCE MEASUREMENT SYSTEM

The paper presents the results of a partial research in the area of corporate performance measurement performed within the project SGS-2015-021 Development of financial management approaches as a tool of company value growth. It analyzes, evaluates and summarizes the advantages and limitations of the Value-Based Management concept (further just VBM) - a modern management approach that offers a rich potential for companies all around the world and across business areas about how to strengthen and keep their competitiveness. The risk analysis results are presented - the problems connected to the economic value added (further just EVA) algorithm, the obstacles for a clear EVA indicator quantification. Business entities should not neglect these problems, obstacles and risks if the set targets, for which the approach was introduced in the enterprise, are to be completed by the means of implemented VBM concept. In the context of corporate performance measurement risk management, the most attention in this paper is devoted to the topic of corporate capital costs determination. It is one of the most urgent problems during the implementation of VBM concept principles in corporate practice. At the end selected methodical processes (pricing models) which are used for corporate capital costs determination are discussed and critically evaluated. The main outputs of the performed qualitative research present the generalized recommendations and methodology support in the area of capital profitability evaluation and economic value added with a special focus on risk identification and analysis in the process of their quantification.