Question

What is EVA? What are the advantage claimed for EVA? What are its limitations?

Answer 1

Several advantages claimed for EVA are: EVA eliminates economic distortions of GAAP to focus decisions on real economic results. EVA provides for better assessment of decisions that affect balance sheet and income statement or tradeoffs between each through the use of the capital charge against NOPAT.

Answer 2

Answer:

Explanation:

Economic value added

Economic value added (EVA) is a measure of a company's financial performance based on the residual wealth calculated by deducting its cost of capital from its operating profit, adjusted for taxes on a cash basis