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Investing Glossary:
Economic value added (EVA)
Copyright 2009,
Campbell R. Harvey. All Rights Reserved.
Do not reproduce without explicit permission.
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| Term: |
| Economic value added (EVA)
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| Definition: |
| A method of Performance evaluation that adjusts accounting performance for investors` required return On investment. Suppose a division produces a 12% Return on Capital invested. Given the Risk of the division`s business line would have. If investors would usually require 14% on capital invested, the division destroyed Shareholder value by the EVA metric. This description is Trade marketed by Stern-Stewart.
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