Question

Economic value added (EVA) analysis indicates:

a. the amount of increased capital generated by each dollar of income.
b. the percentage of each sales dollar that remains as profit after all expenses are covered.
c. the amount of income generated by each dollar of capital investment.
d. how much shareholder wealth is being created.
e. the number of sales dollars generated by each dollar of capital investment.

Answer 1

Answer:

d. how much shareholder wealth is being created.

Explanation:

Economic value added (EVA) -

It helps to measure the financial performance of the company depending on the residual wealth minus the cost of capital from the operating profit , is referred to as economic value added .

Hence ,

EVA = Net Operating profit after tax - Operating Capital*Weighted average cost of capital

As EVA can give the perfect economic profit of the company , it is also known as economic profit .

Hence , from the given question,

The correct option is d.