IDEAS home Printed from https://ideas.repec.org/a/sae/globus/v1y2000i2p279-299.html
   My bibliography  Save this article

Economic Value Added (EVA): Performance Metric to Sustain Competitiveness

Author

Listed:
  • Ahindra Chakrabarti

    (International Management Institute, New Delhi)

Abstract

The concept of Economic Value Added (EVA) has got wide acceptance as the key indicator of performance ever since industry started shifting from the product-centric world of the past to the value-centric world of the future. Economic Value Added estimates a particular type of economic profit, which states that in order to earn genuine profits, it is not only necessary for a company to earn sufficient profit to cover the firm's operating costs, but also to cover the cost of capital. A positive EVA indicates that value has been created for shareholders by the company, and a negative EVA signifies that value has been destroyed by the firm during the period of operation. The article also suggests that capital charge is not the only deciding factor of EVA, better management of operating costs will also help the companies to contribute to positive EVA.

Suggested Citation

  • Ahindra Chakrabarti, 2000. "Economic Value Added (EVA): Performance Metric to Sustain Competitiveness," Global Business Review, International Management Institute, vol. 1(2), pages 279-299, August.
    • Handle: RePEc:sae:globus:v:1:y:2000:i:2:p:279-299
    DOI: 10.1177/097215090000100207
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/097215090000100207
    Download Restriction: no
    File URL: https://libkey.io/10.1177/097215090000100207?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:globus:v:1:y:2000:i:2:p:279-299. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.imi.edu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.