Economic value added is a performance measure stating that a company must earn more than it must pay for its capital if it is to increase in value.

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Economic value added (EVA) is a financial metric used to measure the value created by a company above and beyond its cost of capital. It is calculated by subtracting the cost of capital from a company's net operating profit after tax (NOPAT). If EVA is positive, it indicates that the company is creating value for its shareholders and increasing in value. Therefore, the statement that a company must earn more than it must pay for its capital if it is to increase in value is true.

Economic Value Added Is a Performance Measure Stating That a Company