Economic value added includes a charge for the cost of equity that is not included on financial statements prepared according to GAAP.

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Economic value added (EVA) is a financial metric that subtracts the cost of equity from net operating profit after tax (NOPAT) to calculate the return on investment for shareholders. This charge for the cost of equity is not included on financial statements prepared according to Generally Accepted Accounting Principles (GAAP).

Economic Value Added Includes a Charge for the Cost of Equity