Economic Value Added (EVA)

Economic Value Added (EVA) is a financial measure that shows a company's true profitability after subtracting the cost of capital. It reflects whether the company is generating value above the minimum return required by its investors and lenders. If EVA is positive, the company is creating wealth; if negative, it's destroying value. Essentially, EVA helps assess if a business is earning more than the expenses of using its resources, guiding management to make better decisions focused on value creation rather than just accounting profit.