Economic Value Added (EVA®)

Economic value added (EVA®) :

A) Encourages divisional managers to accept only new capital projects (i.e., long-term investments) with a return on investment (ROI) that exceeds the current ROI.
B) Of $50,000 indicates that the division earned $50,000 for the company.
C) Of $10,000 indicates that the division's actual earnings (adjusted for bias effects of accounting conservatism) exceed the division's imputed capital charge by $10,000.
D) Is considered appropriate for evaluating the financial performance of profit but not investment centers.
E) Has the added benefit of being usable for income tax determination purposes.