Accounting profit ignores the cost of equity; EVA charges for all capital. A company can report profits yet destroy value if its returns fall below its cost of capital. EVA is used for performance measurement and executive pay.
How to use the Economic Value Added Calculator
- NOPAT
- Invested capital
- Invested capital
- Total assets
- Current liabilities
- WACC
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter NOPAT, invested capital (or total assets and current liabilities) and WACC.
Tips
- Take figures from the same financial statements and the same fiscal year.
- Compare ratios with companies in the same industry, not across industries.
- Use several valuation measures together; no single ratio tells the whole story.
- Market prices change every second – refresh the share price before you rely on a result.
Common mistakes to avoid
- Mixing per-share figures with company totals.
- Using trailing earnings for one company and forward earnings for another.
- Forgetting dilution from options and convertible securities.
Inputs explained
| Field | What to enter |
|---|---|
| NOPAT | Amount in your currency |
| Invested capital | Choose one: Enter directly, Total assets − current liabilities |
| Invested capital | Amount in your currency |
| Total assets | Amount in your currency |
| Current liabilities | Amount in your currency |
| WACC | In % |
What each result means
- Capital charge = [Invested capital]×[WACC]÷100
- Economic value added (EVA) = [NOPAT] – [Capital charge]
- Return on invested capital = [NOPAT]÷[Invested capital]×100
Example values
How the main result changes when NOPAT changes and everything else stays at the example values above:
| NOPAT | Economic value added (EVA) |
|---|---|
| 1,600,000 | -650,000 |
| 2,400,000 | 150,000 |
| 3,200,000 | 950,000 |
| 4,000,000 | 1,750,000 |
| 4,800,000 | 2,550,000 |
| 6,400,000 | 4,150,000 |
Formula
Invested capital = total assets − current liabilitiesEVA = NOPAT − invested capital × WACCWorked example
Inputs — NOPAT: $3,200,000; Invested capital: Total assets − current liabilities; Invested capital: $25,000,000; Total assets: $30,000,000; Current liabilities: $5,000,000; WACC: 9 %.
Results — Invested capital = $25,000,000.00; Capital charge = $2,250,000.00; Economic value added (EVA) = $950,000.00; Return on invested capital = 12.8 %.
Frequently asked questions
What is EVA?
Profit after deducting a charge for all capital employed.
What does negative EVA mean?
The company earns less than its cost of capital – it destroys value.
How is EVA related to ROIC?
EVA = (ROIC − WACC) × invested capital.
What formula does the Economic Value Added Calculator use?
Invested capital = total assets − current liabilities.