EVA and Innovations in Decision-Making and Financial Management

Abstract

The economic value added (EVA) of a company is currently acknowledged as the single, most appropriate internal measure of corporate financial performance. Its appeal lies in the fact that it is conceptually sound as it reflects the true economic profit of a company after taking into account the full cost of capital, including the (opportunity) cost of equity. This study investigates how existing management accounting and financial management techniques can be adjusted to incorporate the EVA perspective. It also applies these adjusted techniques to a company listed on the JSE Securities Exchange South Africa.