How to Calculate EVA

Performance Measurement
Knowledge Center

Best Practices

Sign up

Malygin Vasily
Student (University), Russian Federation

How to Calculate EVA

Another way to describe how to calculate EVA:
Economic Value Added = NOPAT - Capital Charges
or
Economic Value Added = NOPAT - ( Invested Capital * WACC )
or
Economic Value Added = Invested Capital * ( ROIC - WACC )

  Rahul Patil
Student (MBA), India
 

Calculating EVA Once Equity is Raised

We calculate EVA as NOPAT(%) - WACC. But once equity is raised cost of equity is out of picture. Is EVA still a good measure?
Another question is that we get EVA after deducting interest. So essentially we are removing the debt cost. And we are subtracting debt cost again in NOPAT - WACC. So shouldn't we be using EBIT - WACC?

Start a new forum topic

 

More on Performance Measurement:
Summary
Special Interest Group
Mehul Doshi
CxO / Board

Performance Measurement
Knowledge Center



About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2021 12manage - The Executive Fast Track. V15.8 - Last updated: 20-9-2021. All names of their owners.