Economic Value Added (EVA) is a financial performance metric that calculates the true economic profit of a company by considering the cost of capital. It helps in assessing how efficiently a company is generating value for its shareholders beyond the required return on its capital investments.

Economic Value Added

financial performance metric

true economic profit

Cost of capital is the rate of return that a business must earn on its investment projects to maintain its market value and attract funds. It serves as a critical benchmark for making investment decisions, as it represents the opportunity cost of using capital for a specific project instead of alternative investments.

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