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
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: Suggested Citation
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