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Definition Sandvik Value Added (SVA)

Published byΦίλομενης Δεσποτόπουλος Modified over 6 years ago

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Presentation on theme: "Definition Sandvik Value Added (SVA)"— Presentation transcript:

1 Definition Sandvik Value Added (SVA)
KA/Group Business Control

2 Document Information Title: Definition Sandvik Value Added (SVA)
Description: Responsible: KA/Anders Östling Valid as of: 1 September 2010 Reviewed: 1 September 2012

3 Sandvik Value Added (SVA)
SVA = EBIT - (WACC x Average Capital Employed) Change in Volume (Growth) Change in EBIT margin (price or cost) Change in Capital employed (lean production) WACC is set by the group, based on risk, equity- and debt financing Growth Sales EBIT Profitability Costs SVA Fixed assets Capital efficiency CE WC WACC

4 SVA Definition – Actual Quarter
EBIT - WACC*(CE OB+CE CB)/2 x 0,25 EBIT = Earnings before interest and taxes, quarter to date WACC = Weighted average cost of capital CE (Capital employed) = Total assets minus external interest-free liabilities OB = Opening balance, actual quarter CB = Closing balance, actual quarter Weighted CE (W) for one quarter = 0,25 Quarter 2, 3 and 4 SVA for Q2, Q3 and Q4 is calculated as accumulated SVA current period minus accumulated SVA previous quarter

5 SVA Definition - Actual Year to Date
EBIT - WACC*Average CE x W Q1-2 EBIT = Earnings before interest and taxes, year to date WACC = Weighted average cost of capital CE (Capital employed) = Total assets minus external interest-free liabilities Average CE = (Opening balance this year + closing balance Q1 + closing balance Q2)/3 W = Weighted CE for two quarters = 0,5 Q1-3 Average CE = (Opening balance this year + closing balance Q1 + closing balance Q2 + closing balance Q3)/4 W = Weighted CE for three quarters = 0,75

6 SVA Definition - Actual Year to Date, Full Year
EBIT - WACC*Average CE Q1-4 EBIT = Earnings before interest and taxes, year to date WACC = Weighted average cost of capital CE (Capital employed) = Total assets minus external interest-free liabilities Average CE = (Opening balance this year + closing balance Q1 + closing balance Q2 + closing balance Q3 + closing balance Q4)/5

7 SVA Definition - Forecast Year End, FC0 prel.
EBIT - WACC*Average CE Forecast 0, preliminary EBIT = Earnings before interest and taxes, forecast end of year WACC = Weighted average cost of capital CE (Capital employed) = Total assets minus external interest-free liabilities Average CE = (OB+CB FC Q1+CB FC Q2+CB FC Q3+CB FC Q4)/5 OB=CB FC3 Q4= CB Q3+investments-depreciations+/-change in NWC CB FC Q1= CB FC3 Q4+investments-depreciations+/-change in NWC CB FC Q2= CB FC Q1+investments-depreciations+/-change in NWC CB FC Q3= CB FC Q2+investments-depreciations+/-change in NWC CB FC Q4= CB FC Q3+investments-depreciations+/-change in NWC

8 SVA Definition - Forecast Year End
EBIT – WACC*Average CE Forecast 0, definite EBIT = Earnings before interest and taxes, forecast end of year WACC = Weighted average cost of capital CE (Capital employed) = Total assets minus external interest-free liabilities Average CE = (OB+CB FC Q1+CB FC Q2+CB FC Q3+CB FC Q4)/5 OB=CB FC3 Q4= CB Q3+investments-depreciations+/-change in NWC CB FC Q1= CB FC3 Q4+investments-depreciations+/-change in NWC CB FC Q2= CB FC Q1+investments-depreciations+/-change in NWC CB FC Q3= CB FC Q2+investments-depreciations+/-change in NWC CB FC Q4= CB FC Q3+investments-depreciations+/-change in NWC

9 SVA Definition - Forecast Year End
EBIT – WACC*Average CE Forecast 1 EBIT = Earnings before interest and taxes, forecast end of year WACC = Weighted average cost of capital CE (Capital employed) = Total assets minus external interest-free liabilities Average CE = (OB+CB Q1+CB FC Q2+CB FC Q3+CB FC Q4)/5 OB = Closing balance Q4 CB Q1 = Closing balance Q1 CB FC Q2= CB Q1+investments-depreciations+/-change in NWC CB FC Q3= CB FC Q2+investments-depreciations+/-change in NWC CB FC Q4= CB FC Q3+investments-depreciations+/-change in NWC

10 SVA Definition - Forecast Year End
EBIT – WACC*Average CE Forecast 2 EBIT = Earnings before interest and taxes, forecast end of year WACC = Weighted average cost of capital CE (Capital employed) = Total assets minus external interest-free liabilities Average CE = (OB+CB Q1+CB Q2+CB FC Q3+CB FC Q4)/5 OB = Closing balance Q4 CB Q1 = Closing balance Q1 CB Q2 = Closing balance Q2 CB FC Q3= CB Q2+investments-depreciations+/-change in NWC CB FC Q4= CB FC Q3+investments-depreciations+/-change in NWC

11 SVA Definition - Forecast Year End
EBIT – WACC*Average CE Forecast 3 EBIT = Earnings before interest and taxes, forecast end of year WACC = Weighted average cost of capital CE (Capital employed) = Total assets minus external interest-free liabilities Average CE = (OB+CB Q1+CB Q2+CB Q3+CB FC Q4)/5 OB = Closing balance Q4 CB Q1 = Closing balance Q1 CB Q2 = Closing balance Q2 CB Q3 = Closing balance Q3 CB FC Q4= CB Q3+investments-depreciations+/-change in NWC

12 SVA Definition - Forecast Quarter
SVA for a single forecasted quarter is calculated as accumulated forecasted SVA for a certain period minus accumulated forecasted SVA for the previous period

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