Definition for "Economic Value Added" in the Quantum Dictionary

- Social Sciences -

Finance & Accounting Dictionary

A finance and accounting concept defining a method, measure, or process used to record activity and support financial decisions. It specifies how value, risk, or performance is measured or controlled through standardized rules and routines. It does not ensure correctness without reliable inputs, appropriate assumptions, and effective review and controls.

Social Sciences Dictionary

A performance measurement that quantifies a firm’s economic profit as net operating profit after taxes (NOPAT) minus a capital charge equal to the weighted average cost of capital (WACC) multiplied by the capital employed: EVA = NOPAT − (WACC × Capital Employed); it expresses whether operating returns exceed the opportunity cost of capital.