Which of the following is true of economic value added (EVA)?
A)It emphasizes after-tax operating income and actual cost of capital.
B)It includes all assets used to generate operating income.
C)It is the difference between operating income and operating assets.
D)It typically uses a minimum expected rate of return.

Question

Quizplus · Accepted Answer

Economic value added (EVA) emphasizes after-tax operating income and actual cost of capital. It deducts the cost of capital from the after-tax operating income to determine the value that is being created for shareholders. EVA is a measure of a company's financial performance that considers all the costs of generating revenue, including the opportunity cost of using capital. It also provides insight into how much value is being created for shareholders above and beyond the cost of capital.

Which of the Following Is True of Economic Value Added