What Does Economic Value Added - EVA Mean?
A measure of a company's financial performance based on the residual wealth calculated by deducting cost of capital from its operating profit (adjusted for taxes on a cash basis). (Also referred to as "economic profit".)
The formula for calculating EVA is as follows:
= Net Operating Profit After Taxes (NOPAT) - (Capital * Cost of Capital)
A measure of a company's financial performance based on the residual wealth calculated by deducting cost of capital from its operating profit (adjusted for taxes on a cash basis). (Also referred to as "economic profit".)
The formula for calculating EVA is as follows:
= Net Operating Profit After Taxes (NOPAT) - (Capital * Cost of Capital)
Investopedia explains Economic Value Added - EVA
This measure was devised by Stern Stewart & Co. Economic value added attempts to capture the true economic profit of a company.
This measure was devised by Stern Stewart & Co. Economic value added attempts to capture the true economic profit of a company.
