28 March 2009
CALCULATION OF EVA. FORMULA The basic formula for calculating EVA is:
Net Sales - Operating Expenses ------------------------------------------------------ Operating Profit (EBIT) - Taxes ------------------------------------------------------ Net Operating Profit After Tax (NOPAT) - Capital Charges (Invested Capital x Cost of Capital) ------------------------------------------------------ Economic Value Added (EVA)
28 March 2009
It is a measure of a company's financial performance based on the residual wealth calculated by deducting cost of capital from its operating profit (adjusted for taxes on a cash basis). (Also referred to as "economic profit".)
CAclubindia
