The measure which is after-tax operating income minus the total annual cost of capital is called
A)ROI.
B)EPS.
C)ROE.
D)EVA.
E)MVA.

Question

Quizplus · Accepted Answer

The measure described in the question is Economic Value Added (EVA), which is calculated as after-tax operating income minus the total annual cost of capital. ROI (A), or return on investment, simply measures the profitability of an investment. EPS (B), or earnings per share, measures the portion of a company's profit allocated to each outstanding share of stock. ROE (C), or return on equity, measures a corporation's profitability by calculating how many dollars of profit a company generates with every dollar of shareholders' equity. MVA (E), or market value added, measures the difference between the market value of a company and the capital contributed by investors.

The Measure Which Is After-Tax Operating Income Minus the Total