Which of the following statements is true concerning economic value added (EVA)?
A)EVA alleviates the shortcoming of the return on investment measurement.
B)EVA calculates a percentage for comparison purposes.
C)EVA is required by the New York Stock Exchange.
D)EVA is the same as economic payback analysis.

Question

Quizplus · Accepted Answer

Economic value added (EVA) is a financial metric that attempts to capture the true economic profit generated by a company. It is calculated by subtracting the cost of capital from the net operating profit after taxes. EVA is considered a superior measure of performance compared to traditional measures like return on investment (ROI) because it takes into account the cost of capital and the opportunity cost of investing in a particular project or business. Therefore, statement A is true, while statements B, C, and D are false.

Which of the Following Statements Is True Concerning Economic Value