Systemic Value Added: An Alternative to EVA as a Residual Income Model (Valore Aggiunto Sistemico: un'alternativa all'EVA quale indice di sovraprofitto periodale)

Budget, Vol. 25, No. 1, pp. 63-71, 2001

28 Pages Posted: 10 Mar 2008 Last revised: 14 Jul 2009

See all articles by Carlo Alberto Magni

Carlo Alberto Magni

Università degli studi di Modena e Reggio Emilia (UNIMORE) - School of Doctorate E4E (Engineering for Economics-Economics for Engineering)

Abstract

This work presents a notion of residual income called Systemic Value Added (SVA). It is antithetic to Stewart's (1991) EVA, though it is consistent with it in overall terms: a project's Net Final Value (NFV) can be computed as the sum of capitalized EVAs or as the sum of uncapitalized SVAs. As a result, SVA and EVA decompose the NFV in different ways. Two numerical examples show the application of the model proposed. The two notions are the result of a different cognitive approach. The existence of possible formal translations of the residual income concept induces to regard residual income as a mere conventional notion.

Note: The downloadable file contains both the English translation and the original published paper.

Keywords: systemic approach, residual income, net final (present) value, EVA, SVA, decomposition

JEL Classification: G11, G12, G31, M21, M41, M52

Suggested Citation

Magni, Carlo Alberto, Systemic Value Added: An Alternative to EVA as a Residual Income Model (Valore Aggiunto Sistemico: un'alternativa all'EVA quale indice di sovraprofitto periodale). Budget, Vol. 25, No. 1, pp. 63-71, 2001, Available at SSRN: https://ssrn.com/abstract=1103492

Carlo Alberto Magni (Contact Author)

Università degli studi di Modena e Reggio Emilia (UNIMORE) - School of Doctorate E4E (Engineering for Economics-Economics for Engineering) ( email )

Italy