Firms with a positive economic value added (EVA):
A)have increasing growth in earnings
B)have an increasing rate of return on investment
C)have a return on capital greater than their cost of capital
D)have a high return on book value

Question

Quizplus · Accepted Answer

Economic value added (EVA) is a financial performance metric that compares a firm's revenue to its total costs of capital. Firms with a positive EVA have generated returns that exceed their cost of capital. Therefore, option C, which states that firms with a positive EVA have a return on capital greater than their cost of capital, is the correct choice. Options A and B do not necessarily apply to all firms with a positive EVA. Option D is not a relevant factor in determining a firm's EVA.

Firms with a Positive Economic Value Added (EVA)