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This query is : Open
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)
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".)
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