- Economic Value Added (EVA) is a measure of a company's financial performance that calculates the value created beyond the required return of its shareholders.
- EVA is determined by subtracting the firm's cost of capital from its operating profit, adjusted for taxes on a cash basis.
- It serves as an indicator of how profitable company projects are in relation to the capital it has invested.
Guys, I've been trying to wrap my head around this whole Economic Value Added (EVA) concept. Read a couple of articles on it, but elevated financial jargon has been throwing me off balance. It would be awesome if someone could break it down in easier terms. Your own interpretation or simplified explanation would help. Been really bugging me and have to get a clear understanding on it. Thanks for your time!
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