Measuring Economic Value Added: A Survey of the Practices of Eva(R) Proponents

Journal of Applied Finance, Vol. 11, 2001

Posted: 3 Dec 2001

See all articles by Samuel C. Weaver

Samuel C. Weaver

Lehigh University - Department of Finance

Abstract

Over the past decade, consultants, the popular business press, a number of companies, and a few investment analysts have heralded Economic Value Added (EVA(R)). In theory, EVA is net operating profit after tax (NOPAT) less a capital charge for the invested capital (IC) employed in the business. This survey bridges the gap between "theory" and "practice" by detailing how EVA proponents measure EVA. This survey is important because its fieldwork identifies significant inconsistencies in the measurement of EVA and its major components.

JEL Classification: G39, M40

Suggested Citation

Weaver, Samuel C., Measuring Economic Value Added: A Survey of the Practices of Eva(R) Proponents. Journal of Applied Finance, Vol. 11, 2001, Available at SSRN: https://ssrn.com/abstract=285562

Samuel C. Weaver (Contact Author)

Lehigh University - Department of Finance ( email )

621 Taylor Street
Bethlehem, PA 18015
United States

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