Which of the following financial control measures is calculated by taking after-tax operating profit minus the total annual cost of capital?
A)market value added
B)principle value added
C)economic value added
D)total asset turnover
E)times interest earned

Question

Quizplus · Accepted Answer

Economic value added (EVA) is a financial control measure that is calculated by taking after-tax operating profit and subtracting the total annual cost of capital. EVA measures the amount of value created by a company in a given period, and it is considered a more accurate measure of a company's profitability than traditional measures such as net income or earnings per share. The other options listed (market value added, principle value added, total asset turnover, and times interest earned) do not involve the calculation of after-tax operating profit minus the total annual cost of capital.

Which of the Following Financial Control Measures Is Calculated by Taking