| Economic Value Added |
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The underlying concept was first introduced by Eugen Schmalenbach , and the current theory was formulated by Joel M. Stern . STERN STEWART & COMPANY Stern Stewart & Company owns a registered trademark for EVA™ for a brand of software and financial consulting/training services. The proprietary component of what Stern Stewart & Co. does is the adjustments. The amortisation of goodwill or capitalisation of brand advertising and other similar adjustments are the translations that occur to Economic Profit to make it EVA. CALCULATING EVA In the field of Corporate Finance , economic value added is a way to determine the value created, above the required return, for the Shareholder s of a Company . The basic formula is: : where : , is the firm's return on capital, NOPAT is the Net Operating Profit After Tax and c is the cost of capital. Shareholders of the company will receive a positive value added when the return from the equity employed in the business operations is greater than the cost of that capital; see Working Capital Management . Any value obtained by employees of the company or by product users is not included in the calculations. OTHER MEASURES OF SHAREHOLDER VALUE SEE ALSO REFERENCES EXTERNAL LINKS
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