An analysis of the uses and advantages of using economic value added (EVA) as a measurement tool.
Written in 2007; 1,914 words; 7 sources; MLA; $ 61.95
Paper Summary:
This paper discusses economic value added (EVA), which is a performance measure developed by Stern Stewart & Co to measure the true economic profit produced by a company. It describes the formula for EVA and provides an example of how it would be calculated. The paper then describes the uses and advantages of using EVA for a business.
From the Paper:
"EVA is a tool that is easily used by corporate executives to determine and justify to their investors and shareholders expenditures that may boost the bottom line without demonstrating a practical or traditional use. This is necessary in this age where technology-based and high technology-use corporations need to purchase software or systems that have not been utilized, yet promise high yield. It is also an instrument by which economic profit may be calculated by taking a company's net after tax operating profit and subtracting from it the product of the company's invested capital multiplied by its percentage cost of capital. This provides a standardized measure for the profits the company generated and helps the company determine future expenditures."
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