The formula for EVA (economic value added) is:
A) operating income divided by average total assets.
B) operating income minus minimum acceptable operating income.
C) after-tax operating income minus the weighted average cost of capital times average total assets excluding current liabilities.
D) operating income divided by sales revenue.

Question

Quizplus · Accepted Answer

EVA measures the amount of value a company has created in excess of the capital it has invested. So, after-tax operating income (net operating profit after tax) is reduced by the cost of invested capital (weighted average cost of capital multiplied by average total capital invested) to calculate EVA.

The Formula for EVA (Economic Value Added) Is