what is economic value added eva 
economic value added eva is a measure of a company s financial performance based on the residual wealth calculated by deducting its cost of capital from its operating profit adjusted for taxes on a cash basis eva can also be referred to as economic profit as it attempts to capture the true economic profit of a company this measure was devised by management consulting firm stern value management originally incorporated as stern stewart co understanding economic value added eva eva is the incremental difference in the rate of return ror over a company s cost of capital essentially it is used to measure the value a company generates from funds invested in it if a company s eva is negative it means the company is not generating value from the funds invested into the business conversely a positive eva shows a company is producing value from the funds invested in it the formula for calculating eva is eva nopat invested capital wacc 