Economic value added is a performance measure of economic value created in respect to profits being higher than the cost of capital.

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Quizplus · Accepted Answer

Economic value added (EVA) is indeed a performance metric that measures the amount of value created or destroyed by a business. It is calculated as the difference between the net operating profit after taxes (NOPAT) and the cost of capital. If NOPAT is higher than the cost of capital, the business is considered to have created value, and the amount of value created is the EVA.

Economic Value Added Is a Performance Measure of Economic Value