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Economic Value Added
Title: Economic Value Added
Category: Literature / English
Details: Words: 2028 | Pages: 8.6 (approximately 235 words/page)
Economic Value Added
EVA is a way of measuring a firm's profitability. EVA is NOPAT minus a charge for all capital invested in the business (Byrne 1). A more intuitive way to think of EVA is as the difference between a firms NOPAT and its total cost of capital (Kramer & Pushner 40). Stern Staurt's numerical definition of EVA is calculated for any year by multiplying a firm's economic book value of capital © at the beginning of the year by the …showed first 75 words of 2028 total…
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…showed last 75 words of 2028 total…for positive and negative EVA and different capital multiples for different size companies. This requires complex calculations, a regularly cited problem. However, in this context EVA lives up to its reputation as a great measure of corporate performance. Other functions, such as aligning employee and shareholder goals, the basis for an incentive system and a more realistic picture of economic reality, makes EVA more attractive. I would recommend using Stern Stewart model to calculate EVA.
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