Economic Value Added Calculator
Economic Value Added Calculator
EVA is short for economic value added. It is a measure of the actual financial performance of a company. The economic Value added equal to Net operating Profit after tax less than invested capital multiple weighted average cost of capital.
Formula us,
EVA = NOPAT – (Invested capital * WACC),
Let us consider,
- NOPAT– is the net operating profit after tax. NOPAT is generally listed on a company’s income statement.
- (Invested capital * WACC) – is the finance charge, representing the minimum return required by finance providers, investors and shareholders.
- WACC– is the firm’s weighted average cost of capital. Generally provided as a public record, it is the average rate of return a company .
- Invested capital – is the funds invested by shareholders for equity, bond-holder.
Calculate the Economic Value added
EVA = NOPAT – ((Total assets – Current liabilities) * WACC)
Example:
The startup’s 2009 , NOPAT is $700,000, the cost of invested capital is 15%, and the expended capital is $1,500,000.
EVA = NOPAT – (Total assets – Current liabilities) * WACC)
EVA=700,000-(15,00,000-(15%)
The answer is EVA = $475000