What is EVA? How it create wealth for you?

.      EVA is economic value added, a management tool. EVA supporters claim it helps to find out a firm’s ability to create wealth than the traditional measurement of EPS and return on equity. Carrick (2007) points out, by using EVA approach, “you take the profits a company makes and then subtract the full cost of generating those profits. If the company has profits left over, it's adding economic value; if the costs of generating a profit exceed the profit, then value is being destroyed” (p.1). The object of EVA method is to find out the real profits (or promotes the wisdom of entrepreneur, and innovation in organizational management) from the business, and not just politics, or paper work.  

Franki

References

Carrick, R. (2007, September 1). For lowdown on wealth earners, check the EVA. The globe and mail (Canada). Retrieved March 07, 2009, from LexixNexis Academic database.

Gitman, L. (2009). Principles of managerial finance (12th edition). Boston, MA:  Pearson Prentice Hall