Valuation

Economic Value Added

Definition

What is Economic Value Added?

After-tax operating profit minus a charge for capital employed.

Example in practice

Positive EVA means operations earned more than the required cost of capital.

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The price at which an asset could trade in the market at a given time.

An estimate of an asset's underlying economic worth based on expected cash flows, assets, or earning power.

An estimate of an asset's appropriate value under specified assumptions or accounting standards.

Present value of expected cash inflows minus present value of expected cash outflows.

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