Economic Value Added

Abstract

EVA is a concept that has been known in Latin America in the early nineties, despite the economic and financial theories developed approximate elements for more than a century.

It is important consideration in the financial reporting since EVA is more than just an identification number. It combines both management as well as the claims of shareholders and stakeholders. EVA not only measures the financial performance, but also the market value of the company. A positive EVA means, therefore, that the company's value could be increased further.

Economic Value Added (EVA)

Introduction

Economic Value Added is a tool in business decision-making about the project. In addition, it is also a management tool Value Drivers, which are those indicators that have the greatest impact on market capitalization and which can be varied to obtain more value from the project. EVA model is one of the key indicators that can help in optimizing the management of RIA implementation process internally. Furthermore, this model is effective in the count and internal venture, foreign ventures and result in creating a separate company under highly risky project.

Discussion

Economic value added (EVA) is a company's profit from ordinary activities after tax, reduced by the amount of fees for the entire capital invested in the company. This indicator is used to assess the effectiveness of the company from the perspective of its owners, who believe that the activities of the company is to have a positive result if the company managed to earn more than what makes up for the profitability of alternative investments. This explains the fact that the calculation of the amount of profit EVA deducted not only pay for the use of borrowed funds, and equity (Garvey, 2000). It can be argued that this approach is more related to the economic aspect rather than accounting. The Economic Value ...