ECONOMIC VALUE ADDED

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ECONOMIC VALUE ADDED..

Answer / guest

One of the important objective of wealth maximisation
difference between Percentage of Return On investment and
the Perecentage of Over all cost of capital.it is one of
the performance indicator for the effectine costing
decisions.

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ECONOMIC VALUE ADDED..

Answer / soumya

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)

This measure was devised by Stern Stewart & Co. Economic
value added attempts to capture the true economic profit of
a company

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ECONOMIC VALUE ADDED..

Answer / dk

Economic Value Added (EVA), or economic rent, is a widely
recognized tool that is used to measure the efficiency with
which a company has used its resources. In other words,
EVA is the difference between return achieved on resources
invested and the cost of resources. Higher the EVA, better
the level of resource unitization.

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