Economic Value Added Calculator
Calculate Economic Value Added (EVA) using NOPAT, invested capital, and WACC to measure shareholder value creation.
What Is Economic Value Added?
Economic Value Added (EVA) estimates whether a company generates returns above the cost of the capital invested in it. Positive EVA means the business created shareholder value beyond the minimum return required by investors and lenders.
EVA Formula
$$\text{EVA} = \text{NOPAT} - (\text{Invested Capital} \times \text{WACC})$$
NOPAT is net operating profit after tax. WACC is the weighted average cost of capital. The product of invested capital and WACC is the finance charge, or the return investors expect for providing funds. Pair this with our Cost of Capital Calculator and Net Operating Income Calculator when analyzing full capital structure.
Frequently Asked Questions
What does a positive EVA mean?
Positive EVA indicates the company earned more than the cost of its invested capital. Shareholders received value above the minimum required return.
How is invested capital calculated?
Common approaches include total assets minus current liabilities, or the sum of equity and long-term debt. Use the method consistent with your WACC and NOPAT definitions.
Is EVA better than net income?
EVA adjusts for the cost of equity capital, which accounting net income ignores. It is especially useful for capital-intensive businesses where large asset bases require meaningful returns.
What are EVA limitations?
EVA favors larger asset bases, works best for capital-intensive firms, and reflects only the measured period. It is less meaningful for early-stage or intangible-heavy companies with negative NOPAT.
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