There are several methods for measuring the performance and
value of a company. These are, earnings per share, earnings
growth rate, dividend per share, rate of return on equity and free
cash flow.
The purpose of this article is to show that all these criteria
have some deficiencies and will introduce a new criterion called
Economic value added (EVA).
EVA is computed by subtracting capital charges from net
operating income after taxes.
In this article several examples were presented to show that
EVA. correctly mea sure s company's performance and hence is
superior to all other criteria.
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