Economic Value Added (EVA) is a measure of surplus value created on an investment that provides a financial measure of how well a company is creating value for its shareholders and can be used to assess the overall financial health of the organisation. EVA is an indicator of the profitability of projects undertaken that compares the net operating profit after taxes (NOPAT) to the cost of capital invested in the company. EVA = NOPAT – (WACC x Capital Invested) Where, WACC = Weighted Average Cost of Capital, and Capital Invested = Equity + long-term debt at the beginning of the period
Related Definitions in the Project: The Commercial Definitions
