Economic Value Added

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A performance measure used to evaluate a company’s economic profit (i.e., the value added to a company by its activities in a given time period). It is the calculation of a company’s net operating profit after taxes, minus a cost of capital charge for the investment or capital employed in the business. The Stern Stewart consulting organization registered EVA as a tradename in the 1990s.

Subjects: Financial Institutions and Services — Accounting.

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