Economic Value Added

This is a “value-based” metric that is becoming popular with many companies. EVA is an integrated framework for performance measurement, value-based planning and incentive compensation developed by Stern Steward founders Joel Stern and G. Bennett Steward III. EVA is calculated by taking operation profits and deducting a charge for the cost of capital. Companies that have adopted EVA have frequently realized long-lasting improvements in operating efficiency, growth, morale, motivation and stock market value.

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