Which of the following have the same meanings as the term "economic value added"? I. abnormal earnings II. residual income III. value created by a firm over a period of time IV. EPS_t − B_t-1× k A)I and II only B)III and IV only C)I, II, and III only D)II, III, and IV only E)I, II, III, and IV

Question

Quizplus · Accepted Answer

Economic Value Added (EVA) is a measure of a company's financial performance based on the residual wealth calculated by deducting its cost of capital from its operating profit. This concept is synonymous with abnormal earnings, residual income, and the value created by a firm over a period of time. The formula provided in option IV is a mathematical representation of calculating such value, taking into account the cost of capital and earnings, thus all options (I, II, III, and IV) correctly describe aspects of Economic Value Added.

Which of the Following Have the Same Meanings as the Term