Economic value added:

Question

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Economic value added (EVA) is a dollar amount that measures a firm's profitability after accounting for the costs of capital. It uses the firm's weighted-average cost of capital (WACC) to determine the cost of capital. EVA uses total assets (both current and non-current) in its computation, but also subtracts all expenses, including a charge for the use of equity capital. EVA can be negative if a firm's return on invested capital is less than its cost of capital. Therefore, the characteristics of EVA include using a dollar amount rather than a percentage, using a firm's WACC, and considering both current and non-current assets in its computation.

Economic Value Added