Eva Finance Formula
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EVA Finance: A Formula for Real Economic Profit
Economic Value Added (EVA), championed by Stern Stewart & Co., provides a refined measure of a company’s financial performance. Unlike traditional accounting metrics like net profit, EVA factors in the cost of capital, offering a more accurate assessment of whether a company is truly generating value for its investors. In essence, EVA answers the fundamental question: Is the company earning more than it costs to finance its operations?