EVA: Economic Value Added

• Main Author: Armendáriz-Lasso, Enrique
• Format: Article
• Language: English
• Published: Universidad Estatal de Milagro 2011-09-01
• Series: Ciencia UNEMI
• Subjects: Economic Value Added (EVA); measure of performance; economic performance; resources management
• Online Access: http://ojs.unemi.edu.ec/index.php/cienciaunemi/article/view/6/4

It is important to know all the techniques and tools that allow us to be aware of the evolution of our company, the results of the management steps carried out by the whole personnel, to see if the efforts and changes that are made affect or don´t affect the profitability or usefulness of the business. EVA (the English abbreviation of “Economic Value Added”, known as Valor Económico Agregado in Spanish), is a tool that enables one to evaluate the managerial performance while keeping in mind the economic results of a company. The EVA enables one to compare the profitability obtained with the cost of the resources negotiated to get this profitability. The results indicate that shareholders prefer to invest in those companies that don't only show a sustained improvement in their business activities, but also a relative improvement in their measures of performance.