The analytical tool called EVA, for Economic Value Added, gained early acceptance from the corporate financial community because of its innovative way of looking at firm’s real profitability. EVA serves as a modern measure of corporate financial success because it is closely aligned with the shareholder wealth-maximization requirement. This book use the more general “EVA” mnemonic to represent the broader context of this value-added term since it focuses primarily on the theory and measurement of the firm’s profitability.

This book looks the role of EVA in financial theory, shows how to estimate EVA in the context of basic financial statement. This book also looks at the empirical evidence for large U.S. wealth creators in the Performance 1000 Universe in order to assess the maximum pricing strength of the EVA metric, and looks on the empirical characteristic of firms that have destroyed wealth. Next, it shows how to use the EVA metric to calculate the intrinsic value of the firm, how to use published financial reports to estimate a firm’s market value added, and how EVA principles can be used to identify the best companies in the marketplace. The last part of this book shows the benefits of using EVA analysis in an industry context, and the benefits of using EVA in assessing the underlying strength of the economy.