Q: what is an "economic value added - eVA"?
Category: glossary , Asked by: Z. Herring from Monte-Carlo, Monaco
A: the "economic value added - eVA " is 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. Visit HY Markets