EVA is the net profit of the firm adjusted for the cost of capital.

Question

Quizplus · Accepted Answer

EVA (Economic Value Added) is a measure of a company's financial performance that calculates the net profit of the firm after adjusting it for the cost of capital. It is calculated as follows: EVA = Net Operating Profit After Taxes (NOPAT) - Capital Charge. Therefore, EVA takes into account the cost of capital and is a better measure of a company's profitability than just the net profit.

EVA Is the Net Profit of the Firm Adjusted for the Cost