Economic value added(eva)

Economic value added (EVA) 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).

The formula for calculating EVA is as follows:

= Net Operating Profit After Taxes (NOPAT) - (Capital * Cost of Capital)

Sorry I wanted to know how to calculate NOPAT

NOPAT = EBIT × (1 − Tax Rate)

Thanks. But then when to use that net of tax formula.

Ya thank you people.

ya correct

as EBIT itself inclues interest component then in that cas no need to again consider int.(1-tax)

but if u r taking PAT then u ll have to add int.(net of tax)