Economic Value Added (EVA)

What separates EVA from other performance metrics ... is that it measures all of the costs of running a business-operating and financing (Stern Stewart and Co).

Information about Economic Value Added (EVA)

Economic Value Added (EVA) is a popular concept in finance - unlike other measures of returns it claims to capture the difference between the value of - fully-accounted - outputs and the value of - fully-accounted - inputs. EVA is the 'profit' calculation that takes the cost of capital, along with more commonly-noted costs, into account (Stewart, 1991).

EVA gained widespread recognition in the 1990s. Many multinational corporations such as AT&T, Coca-Cola and GE have used EVA to gauge their performance (Brigham and Houston, 1998). Similarly, investment analysts study company EVA along with Earning per Share (EPS) and Price-Parnings (P/E) ratios. EVA can be applied to capital budgeting, valuation, management control, and to incentive compensation (Stewart, 1991).

Return to People and Skills topic.

Related books

Financial management for decision makers 7/e

Financial management for decision makers 7/e

Peter Atrill

Price: £52.99

Member Price: £45.04

Saving: £7.95 (15.00%)

In Stock!

Add to basket

D&B Country Insight Snapshot Risk Report - Zimbabwe

D&B Country Insight Snapshot Risk Report - Zimbabwe

Dun & Bradstreet

Price: £100.00

Member Price: £85.00

Saving: £15.00 (15.00%)

In Stock!

Add to basket

D&B Country Insight Snapshot Risk Report - Zambia

D&B Country Insight Snapshot Risk Report - Zambia

Dun & Bradstreet

Price: £100.00

Member Price: £85.00

Saving: £15.00 (15.00%)

In Stock!

Add to basket

D&B Country Insight Snapshot Risk Report - Uganda

D&B Country Insight Snapshot Risk Report - Uganda

Dun & Bradstreet

Price: £100.00

Member Price: £85.00

Saving: £15.00 (15.00%)

In Stock!

Add to basket

Related concepts

Cost-to-Serve Model (CTS)

Cost-to-serve methods are flexible and free from heavy prescriptions … [they] can be applied at varying levels of sophistication from simple spread sheets to...

Find out more

Costing Techniques

No purchasing professional can afford to be unaware of the various cost accounting approaches (Lysons and Farrington, 2006)

Find out more

Spend Analysis

A spend analysis is a process for analysing the historical spend (purchasing) data of an organisation to provide answers to questions concerning spend visibility,...

Find out more