EVA Strategy Among Businesses

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EVA Strategy Among Businesses

EVA Strategy Among Businesses

ANSWER


The calculation of Economic Value Added among organizations has been one of the most significant measures of the organization’s capital efficiency. More specifically, the calculation of EVA, unlike other cash flow calculations, incorporates capital equity within the organization. On this basis therefore, EVA in organizations gives a true picture of how productive and efficient is the capital employed, with regard to its related elements in accounting. Basically, one of the main important roles of EVA is the ability to reveal the underlying productivity of an organization’s capital. However, calculation of EVA in the short-run is not useful in cases where the business is seasonal or low-picking.