Which internal financial performance metric measures economic value created above total cost of capital invested?
AEconomic Value Added (EVA)
BNet Income
CEBITDA
DGross Profit
Explanation
* Economic Value Added (EVA) = NOPAT – (Capital Employed * WACC).
* Measures true economic profit after deducting total cost of equity and debt capital.
* Developed by Stern Value Management for corporate performance tracking.
Exam Relevance
- Topic: Corporate Finance
- Subtopic: Performance Measurement
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