Economic Value Added® is a measure of economic profit. Economic Value Added is calculated as the difference between the Net Operating Profit After Tax (NOPAT) and the opportunity cost of invested Capital. This opportunity cost is determined by multiplying the Weighted Average Cost of debt and equity Capital (WACC) and the amount of Capital employed. The formula for Economic Value Added® is EVA = NOPAT - WACC*Capital Alternatively, we can calculate Economic Value Added® by multiplying Capital by the difference between the Return on Capital (ROC) and the WACC. EVA = Capital*(ROC - WACC) The two formulas are strictly equivalent and allow us to view EVA from different perspectives.
Stern Value Management, originally incorporated as Stern Stewart & Co., is an international management consulting firm. As the creators of Economic Value Added®, we specialize in many different areas of business, including: business strategy, wealth creation, finance, governance and strategic corporate planning.
We're a boutique firm and a team of trusted advisors from all parts of the world. Although we come from diverse backgrounds, we're united by a shared passion to make long-term, sustainable impact for our clients. We love our work and the experiences we make as we strive for the best results for our clients.
Headquartered in New York, we have worked with public and private organizations, including Fortune 100 companies. We have advised over 800 companies around the world, ranging from some of the largest conglomerates worldwide to smaller family businesses. To learn more about Stern Value Management, please visit our website by clicking on the button below.Visit our website