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Economic Value Added (EVA) Calculator

Calculate corporate Economic Value Added (EVA) to measure economic profits.

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Calculation Parameters

Specify your inputs below.

Calculated Result

Cost of Capital Charge $21,250.00
Economic Value Added (EVA) $13,750.00
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Expert Tip

A positive EVA indicates that the business is creating value for stockholders beyond its basic financing costs.

How this Calculator Works

This calculator computes Economic Value Added (EVA), which measures a company's financial performance based on wealth creation. Unlike accounting profits, EVA subtracts the total cost of capital from net operating profits, showing if a business truly creates economic value.

Formula & Methodology

EVA = NOPAT - (Capital Invested * WACC) - NOPAT is the Net Operating Profit After Taxes. - Capital Invested is the total debt and equity funding committed to the firm. - WACC is the Weighted Average Cost of Capital (as a decimal).

Step-by-Step Calculation Example

Here is a step-by-step example showing how the calculations are performed:

A firm has NOPAT of $150,000, total invested capital of $800,000, and WACC of 10%. 1. Calculate the capital charge: $800,000 * 0.10 = $80,000. 2. Subtract capital charge from NOPAT: $150,000 - $80,000 = $70,000. Result: The Economic Value Added (EVA) is $70,000.

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Detailed Insights & Expert Guide

ℹ️ About this Calculation

This equity research and valuation calculator evaluates corporate fundamentals, stock price multiples, cost of capital, dividend discount models, and shareholder return metrics based on SEC financial reporting and Wall Street equity analysis standards.

Variable Glossary

Input

Equity Inputs

Share price, earnings per share (EPS), dividend amount, book value, debt/equity ratio, or systematic beta coefficient.

Parameter

Valuation Output

Price-to-Earnings (P/E), EV/EBITDA multiple, Intrinsic Value ($), WACC %, or Return on Equity (ROE %).

How to Calculate Step-by-Step

1

Step 1

Input current stock price, shares outstanding, or balance sheet / income statement numbers.

2

Step 2

Enter expected growth rate, cost of equity, or market risk premium assumptions.

3

Step 3

Review calculated valuation multiples, margin of safety comparison, or required rate of return.

FAQ

What is WACC and why is it crucial for equity valuation?
Weighted Average Cost of Capital (WACC) represents a company's required average return on debt and equity capital. It is used as the hurdle rate to discount future cash flows in DCF valuation models.
How does stock Beta measure systematic risk?
A stock beta of 1.0 means price volatility matches the broader market index. Beta > 1.0 indicates higher volatility, while Beta < 1.0 reflects lower systematic volatility.
Should valuation multiples be evaluated in isolation?
No. Valuation ratios (P/E, EV/EBITDA, P/B) should always be benchmarked against industry peer groups, historical trading averages, and expected earnings growth (PEG ratio).