Eva - the Paper Is About Economic Value Added

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The paper is about Economic Value Added

Project on:

Economic Value Added

Submitted to:

Prof. Hemant Joshi


10-730 Ankit Parikh

10-742 Harshada Sambre

10-743 Kushal Sangoi

10-744 Komal Saraswat

10-748 Shwetambra Sharma

10-753 Vishakha Sonawale

Economic Value Added

One of the most widely accepted Business Management Principles has been “What can be measured can be controlled”. Corporate all over the world have been trying to work out some “Measurement performance of the organization. The ultimate aim has been to find out whether the corporate has enhanced Corporate Wealth and Shareholder Value over a period of time.

There are various parameters to judge a Corporate Performance Turnover i.e. Top line growth, market Share, Gross margin and Net margin, Operating profits, ,Profit before tax, Profit after Tax, Return on sales turnover, Return on investments(ROI), Return on Net Worth(RONW), Dividend history, Market price data, Earnings per share(EPS), Price- Earnings ratio(PE ratio), Payout ratio, Bonus track record, Employee turnover, Brand valuation, valuation of human assets, Order book position, Segment wise performance and such other parameters have been widely used to assess the Corporate Performance in different aspects of managerial Functions.

However, none of these, either individually or collectively, indicate whether the corporate has enhanced Corporate Wealth and Shareholder Value over a period of time.

The concept of “Economic Value Added (EVA)” was popularized by a New York based consulting firm Stern Stewart & Co., in early eighties. Prominent US corporations such as IBM, Coca- Cola, Procter & Gamble, Johnson & Johnson, Microsoft, General Electric, Eli Lilly, Monsanto, Bausch & Lomb, AT & T and Indian companies such as Infosys, BPL, HLL, NIIT, TCS, Godrej Soaps, Ranbaxy laboratories, Samtel India Ltd have adopted EVA. Infosys Technologies is the first Indian company to report its EVA in the...