| Economic
Value Added - EVA |
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A
concept coined by "Stern Stewart" consultants, it is a measure
of a company's financial performance. EVA measures the residual wealth
of a company, when its cost of capital is deducted from its operating
profit (adjusted for taxes on a cash basis).
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EVA is calculated using either of the formulas:
= Net Operating Profit Less Applicable Taxes - Cost of Capital
or
= (%Return on Invested Capital - %Cost of Capital) * Invested Capital at beginning of period. |
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Dictionary
