Economic Value Added (EVA) Calculator

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Choose whether to enter NOPAT (net operating profit after tax) directly, or derive it from EBIT and a tax rate.
Net Operating Profit After Tax - operating income after adjusting for taxes but before financing costs.
Enter total invested capital directly, or derive it from total assets minus current liabilities.
The total capital deployed in the business: shareholders equity plus interest-bearing debt (use beginning-of-period figure).
Enter WACC (weighted average cost of capital) directly, or compute it from cost of equity and after-tax cost of debt.
Weighted Average Cost of Capital: the blended rate investors expect on the whole capital base.
%
Number of years over which to project EVA, assuming constant WACC.
years
Expected annual percentage growth in NOPAT. Invested capital grows at the same rate (reinvestment assumption).
%
Currency
Economic Value Added (EVA)Value creation
$4,000,000

Surplus profit above the full cost of capital

NOPAT$8,000,000
Capital charge$4,000,000
Invested capital$50,000,000
WACC0.08%
ROIC0.16%
ROIC - WACC spread8%
Value verdictValue creation - ROIC exceeds WACC
NOPAT$8,000,000
Capital charge$4,000,000
EVA$4,000,000
8% %
Significant destruction<-5%Value destruction-5%-0%Modest creation0%-5%Strong creation5%-10%Exceptional creation10%+

EVA is positive: the business created economic value this period.

  • The business earned 8.00 percentage points above its cost of capital, translating into genuine economic profit.
  • Every dollar of invested capital returned more than WACC demands, so shareholders are better off than if capital had been deployed elsewhere at the same risk.
  • NOPAT of $8,000,000 minus a capital charge of $4,000,000 gives the EVA figure above.

Next stepTo maintain and grow EVA, reinvest only in projects where the expected ROIC exceeds WACC, and return surplus capital to shareholders when reinvestment opportunities are scarce.

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