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Economic value added

   Also found in: Acronyms, Wikipedia 0.04 sec.
Economic value added (EVA)
A method of performance evaluation that adjusts accounting performance for investors' required return on investment. Suppose a division produces a 12% return on capital invested. Given the risk of the division's business line, if investors would usually require 14% on capital invested for this level of risk, the division destroyed shareholder value by the EVA metric. This Stern-Stewart has a trade mark on this term.

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A key metric is linking planning with some economic value measure, such as EVA or ROIC," Roth said in an interview, referring to economic value added and return on invested capital.
CalPERS chose its target companies based on stock performance, board practices and a financial performance measure called economic value added.
NYSE:TDW) announced today that it has adopted the Economic Value Added (EVA) management and incentive system.
 
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