Economic value added

High Quality Content by WIKIPEDIA articles! In corporate finance, Economic Value Added or EVA is an estimate of a firm's economic profit - being the value created in excess of the required return of the company's shareholders - where EVA is the profit earned by the firm less the cost of financing the firm's capital. The idea is that shareholders gain when the return from the capital employed is greater than the cost of that capital; see Corporate finance: working capital management. This amount can be determined, among other ways, by making adjustments to GAAP accounting, including deducting the opportunity cost of equity capital. The formula was developed by Joel Stern, and is a registered trademark of Stern Stewart & Co.