EVA — Economic Value Added
Definition: Profit after subtracting the full cost of capital used to generate it. EVA tells you whether a business is actually creating value or just renting it from investors.
Example
The division posted record EBITDA but negative EVA — every incremental dollar required more capital than it returned.
When you'll hear it
EVA shows up most often in board meetings, quarterly business reviews, and strategy off-sites. When someone uses it, they're usually referring to economic value added — and they expect the room to already know what that means.
FAQs
What does EVA stand for?
EVA stands for Economic Value Added.
What does EVA mean in business and finance?
Profit after subtracting the full cost of capital used to generate it. EVA tells you whether a business is actually creating value or just renting it from investors.
Where will I hear EVA used at work?
EVA comes up most often in board meetings, quarterly business reviews, and strategy off-sites. It's used as shorthand for economic value added, so people assume you already know the term.
Related terms
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