The basic concept behind the economic value added (EVA)valuation method is that the firm's value is dependent on how well it can cover the costs of its existing capital.

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The basic concept behind the economic value added (EVA) valuation method is that the firm's value is dependent on how well it can cover the costs of its existing capital. EVA is calculated by subtracting the cost of capital from the net operating profit after taxes (NOPAT), with the idea being that if the firm generates more profit than the cost of its capital, it is creating value for its shareholders.

The Basic Concept Behind the Economic Value Added (EVA)valuation Method