Economic Value Added (Eva): A Research Proposal

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The absence of these however does not detract from the general value of the article, or from the proof of the premise. Furthermore, it could also be acknowledged that the factors described, other than EVA, are already well-known in accounting, and do not need a clear explication of both strengths and weaknesses.

Another factor in favor of the article and its premise is the fact that the authors acknowledge the shortcomings of EVA itself. The article for example includes a "Limitations" section that address these limitations. EVA for example does not take into account the current market value of assets, which could be misleading. Hence, it is difficult for EVA to project the future success of strategic goals and plans. Other factors such as market share and sales growth could better determine such future success. Furthermore, EVA only provides a global, one-year view of the operational performance of a company, which could be further misleading in terms of true value and performance throughout the year.

The fact that these shortcomings are taken into account provides a somewhat balanced view of the issue. In addition, the authors emphasize that EVA is best used with other, more traditional measures in order to provide an accurate measure of its value.

I agree that EVA is an extremely valuable and flexible tool for corporate managers and shareholders alike.

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Both managers and shareholders have a concern regarding the value of the company involved. The more actual profit that a company makes for example, the greater its value and the more benefit for all employees and shareholders involved.

In addition to its actual value in determining profit and value, EVA is also useful in terms of managerial skill. It provides managers with a drive to create value and wealth, as these are clearly visible when implementing EVA. In this way, the concept provides a platform for the implementation of better decision making and long-term thinking. By indicating value drivers and value destroyers, EVA can also be used as a tool for better company management in order to create value throughout the various departments within the company.

In their concluding remarks, the authors note that the implementation of EVA brings about a change of attitude among both managers and employees, based upon the fact that they are obliged to deliver value to their investors. This entails that managers as well as employees to think and behave like owners, and provides a framework for creating value for investors. The EVA system also addresses excess working capital in that a more long-term approach is taken to such capital. Like the authors, I believe that EVA is a beneficial system for companies......

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"Economic Value Added Eva A" (2009, August 16) Retrieved June 4, 2026, from
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