Economic Value Added

View Paper
ESSAY DETAILS Words: 1940
Pages: 7
(approximately 235 words/page)

Essay Database > Literature > English
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 1940 total
Sign up for EssayTask and enjoy a huge collection of student essays, term papers and research papers. Improve your grade with our unique database!
showed last 75 words of 1940 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.