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The Impact of the General Level of Prices and Operating Profit on Economic Value Added (EVA) (Analytical Study: ASE 2001 - 2015)

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Listed:
  • Ebraheem Al Taha'at
  • Mohammad Al-Afeef
  • Saqer Al Tahat
  • Muhannad Ahmad

Abstract

This study aims to show the importance of the economic value added as one of the most modern to measure the financial performance for firms, then to know the effect of the general prices level and earnings before interest and taxes on EVA in the companies listed in (ASE) (2006-2015), the researcher addresses a random sample consisting of (46) Company, and uses regression model, which connects the dependent and independent variables.The results of the study shows that There is a significant impact for the general prices level and the earnings before interest and taxes on the economic value added, and also shows that 22% of the changes in the economic value added are due to general prices level and earnings before interest and taxes, and 78% of the changes are due to other factors.This study also recommends the need to manage of operating expenses because of the positive impact of operating profit on EVA value, and to take inflation into account when calculating the value of EVA, and also searching for other factors that could affect the value of EVA such as sales volume, cost of capital, and the growth in the total assets of the company's financial leverage, etc…

Suggested Citation

  • Ebraheem Al Taha'at & Mohammad Al-Afeef & Saqer Al Tahat & Muhannad Ahmad, 2017. "The Impact of the General Level of Prices and Operating Profit on Economic Value Added (EVA) (Analytical Study: ASE 2001 - 2015)," Asian Social Science, Canadian Center of Science and Education, vol. 13(11), pages 142-142, November.
    • Handle: RePEc:ibn:assjnl:v:13:y:2017:i:11:p:142
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    References listed on IDEAS

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    1. Patell, Jm, 1978. "Impact Of Price-Level Adjustment In The Context Of Risk Assessment And The Effect Of General Price-Level Adjustments On The Predictive Ability Of Financial Ratios - Discussion," Journal of Accounting Research, Wiley Blackwell, vol. 16, pages 293-300.
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      JEL classification:

      • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
      • Z0 - Other Special Topics - - General

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