Measures the value created by a company over its cost of capital.
What it Measures ?
Whether we are earning more than the cost of capital used.
Relevant StakeHolders
CFO, Strategy Team
In-depth Use Case / Real-world Example
EVA is calculated by subtracting the company’s cost of capital from its net operating profit after taxes (NOPAT). If NOPAT is ₹200,000 and the cost of capital is ₹150,000, the EVA is ₹50,000. EVA indicates whether a company is creating or destroying shareholder value by covering its capital costs.
KPI Definition
Business Value
Movement Direction
Sample Formula
Net Operating Profit After Taxes (NOPAT) - (Capital x WACC)
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