Economic value added

Abstract

Learning Objectives: To understand the benefits of the Economic Value Added (EVA) as a tool for measuring business performance and gain the ability to implementarne calculations from the data of the budget, in order to express a value judgment on the company, a division or a single investment. Summary of content: after introducing the concept and principles of EVA, as well as' the Benefits of this indicator compared to traditional performance indicators (ROI, ROE, etc.), we illustrate the main adjustments to specific budget items, in order to recover an economic logic, usually obscured by the accounting policies and / or tax, and determine when so the information necessary to calculate EVA. Once the adjustments described for the purposes of calculating EVA, it shall examine the estimate of the calculation of the cost of capital. Subsequently, proposes a case study in which we calculate the EVA of two companies in order to compare performance in terms of value creation. Finally, we have, in the final, the main benefits and limitations of the indicator EVA.