The after-tax operating income reduced by the total annual cost of capital is equal to the economic value added.

Question

Quizplus · Accepted Answer

This statement is true, as Economic Value Added (EVA) is calculated by subtracting the total cost of capital from the after-tax operating income. EVA is a financial performance measure that assesses a company's ability to create wealth for its shareholders, and it represents the residual income that remains after all capital costs have been accounted for.

The After-Tax Operating Income Reduced by the Total Annual Cost