Economic Value Added (EVA)

Accounting Corporate Finance Financial Terms Dictionary

Contents

Economic Value Added (EVA), also known as Economic Profit, aims to calculate the true economic profit of a company.

EVA is used to measure the value that a company generates from the funds invested in it.
However, EVA relies heavily on invested capital and is best used for asset-rich companies, where companies with intangible assets, such as technology businesses, may not be suitable candidates.