Which of the following statements is most correct about Economic Value Added (EVA)?
A) If a company has no debt, its EVA equals its net income.
B) If a company has positive ROE, its EVA must also be positive.
C) A company's EVA will be positive whenever the cost of equity exceeds the ROE.
D) All of the statements above are correct.
E) None of the statements above is correct.

Question

Quizplus · Accepted Answer

None of the statements are correct because EVA is calculated as NOPAT minus the capital charge (cost of capital times the capital invested), and it does not directly equate to net income, ROE, or cost of equity alone.

Which of the Following Statements Is Most Correct About Economic