Economic Value Added (EVA)
Profit exceeding cost of capital; true economic profit.
Formula
EVA = Operating Profit − (Capital Employed × Cost of Capital)
Real World
Apple consistently generates positive EVA — its operating profit far exceeds the return investors could get elsewhere — making it one of the highest value-creating firms in the world.
Exam Focus
Always interpret the sign: positive EVA means value created, negative means value destroyed — state this explicitly.
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