Which of the following statements is most correct?
A) EVA is a measure of the value added to customers.
B) EVA is a measure of the value added to management.
C) EVA is a measure of the firm's true profitability.
D) EVA is a measure of management compensation.
E) EVA is a measure of stock price.

Question

Quizplus · Accepted Answer

EVA (Economic Value Added) is a financial metric used to evaluate a firm's financial performance. It is calculated by subtracting the cost of capital from the net operating profit after tax (NOPAT). EVA is considered a measure of a company's true profitability as it takes into account both the capital invested in the business and the return generated by that capital. Therefore, option C is the correct answer.

Which of the Following Statements Is Most Correct