The Economic Value Added (EVA) framework is a financial performance method that calculates the true economic profit of a corporation. This framework helps in business decision making by providing a clear picture of the company's economic profit, which is the profit after deducting the cost of capital. This allows businesses to identify areas where they are not generating adequate returns on their investments and make informed decisions to improve profitability. It also helps in aligning the interests of the management with those of the shareholders, as it encourages decisions that increase shareholder value.
Follow up to the first part of our Business Strategies and Frameworks compilation, part 2 offers you...
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