What Does the Economic Value Added (EVA) Calculation Mean to Investors?
Investors, industry and other stakeholders will look at the relative size of the Economic Value Added calculation. This is because a high EVA calculation implies that a company is generating profits in excess of their cost of capital. This is often interpreted as the company is adding value, which is usually interpreted as good news. If the Economic Value Added calculation produces a negative number then this is usually deemed to be bad news, since it implies that the shareholders may have received a better return elsewhere.
