Economic value added. Difference between ROCE and cost of capital, multiplied by capital employed. If EVA is positive, returns are higher than the cost of capital
economic value added. A financial performance measurement developed by Stern Stewart & Company that gauges the creation of shareholder wealth, and evaluates tradeoffs in opportunity costs, by determining net operating profit after taxes minus (capital times the cost of capital).
ECONOMIC VALUE ADDED. measures the difference between the return on a companies capital and the cost of that capital. A positive EVA indicates that value has been created for shareholders; a negative EVA signifies value destruction.
see ECONOMIC VALUE ADDED.
Economic value added. As a result of a processing operation or other business activities, goods or services should be worth more than the sum of the materials and labour that went into producing them. In this project, the economic value added has been taken to be the net present value, ie the revenue stream minus the costs, discounted back to equivalent value in 1997 pounds sterling.
Earned value analysis. Analysis of project progress where the actual money, hours (or other measure) budgeted and spent is compared to the value of the work achieved.
conomic alue dded, difference between ROCE and weighted average cost of capital, multiplied by capital employed. If EVA is positive, the return on capital employed is higher than the cost of capital.
Economic Added Value. A concept used in equity valuation. Equities are ranked according to the excess of income over the firm's theoretical current cost of capital. The weighted average cost of capital (WACC) is estimated from the firm's balance sheet structure and current market conditions, as though it were refinancing itself completely at any given moment. To the extent that a firm can achieve an above-market return on its capital, it should in principle achieve a proportionate above-market valuation.
Economic Value Added. A measure of the wealth generated by companies, EVA was developed by G Bennett Stewart III of US group Stern Stewart and published in 1990 in ‘The Quest for Value'. Unlike other measures of corporate profitability, such as the P/E ratio, EVA takes account of the capital (and the cost of that capital) employed in generating profits. In simple terms, EVA is operating profits after tax less the current cost of all capital employed to produce those profits.
Economic Value Added. The after-tax cash flow generated by a business minus the cost of the capital it has deployed to generate that cash flow. Representing real profit versus paper profit, EVA underlies shareholder value. Using EVA as a lens, it is possible to determine that despite an increase in earnings, a firm may be destroying shareholder value if the cost of capital associated with new investments is sufficiently high.
See Earned Value Analysis
Economic Value Added. Entrepreneurship Exchange offers
This is a "value-based" metric that is becoming popular with many companies. EVA is an integrated framework for performance measurement, value-based planning and incentive compensation developed by Stern Stewart founders Joel Stern and G. Bennett Stewart III. EVA is calculated by taking operating profits and deducting a charge for the cost of capital. The Stern Stewart EVA framework is now employed by more than 300 companies worldwide, including Coca-Cola, Siemens and Sony, as well as government agencies such as the U.S. Postal Service and The Port of Singapore Authority. Companies that have adopted EVA have frequently realized long-lasting improvements in operating efficiency, growth, morale, motivation and stock market value.
Economic Value Added. A measurement of shareholder wealth created by an investment center. A trademark of Stern Stewart & Company, calculating EVA can be very complex but is basically net operating profit after taxes (NOPAT) minus an appropriate charge for the opportunity cost of all capital invested in an enterprise.
Economic Value Added. EVA is a measure of surplus value created on an investment. EVA = (Return on Investment – Cost of Capital) multiplied by (Capital Invested in a Project) or EVA = NOPAT - Capital Charge (See NOPAT and Capital Charge).
Economic Value Added. EVA represents the economic value of the firm and is computed by subtracting the firm's cost of capital (in monetary terms) from the firm's adjusted operating profit (NOPAT). Positive levels of EVA indicate that the management has been adding value through previous investments.= NOPAT - (WACC)(CAPITAL) where NOPAT = EBIT (1-tax rate)
Economic Value Added. Net operating profit after taxes minus (capital x cost of capital). EVA is a measure of the economic value of an investment or project.
Short for “economic value added.†As a measure, EVA is equal to net operating profit after taxes (NOPAT) less a charge for the capital employed in the business (cost of capital).
Economic Value Added. A measure of financial performance calculated by taking net operating income and subtracting a charge for the capital used to produce that income (EVA = net operating income - capital charge).
Economic Value Added. A measurement of shareholder value as a company’s operating profits after tax, less an appropriate charge for the capital used in creating the profits.
Economic Value Added. Simply stated, it is the difference between return on capital employed (ROCE) and the weighted average cost of capital (WACC). It gives the difference between the cost of funds of the company and the return it earns on it.
Economic value added. A firm's net operating profit after the cost of capital is deducted.
Economic Value Added - same as NPV Net Present Value but used in the USA
Economic Value Added. The value added to or subtracted from shareholder value during the life of a project.