Economic Value Added (EVA) Calculator
Enter NOPAT, invested capital and WACC to compute EVA = NOPAT − (capital × WACC), the surplus return above the cost of capital.
Input Data
Results
At a glance:Economic Value Added (EVA) is a branded form of economic profit: EVA = NOPAT − (invested capital × WACC). It charges the full cost of capital, so positive EVA means the business earns above its required return and creates shareholder value; negative EVA means value is destroyed despite an accounting profit. Strict EVA adds accounting adjustments (capitalise R&D, add back deferred tax, etc.); this tool uses the simple form. EVA links operating performance to shareholder value.
Formula
Capital charge = invested capital × WACC.
EVA = NOPAT − capital charge.
Equivalently: EVA = (ROIC − WACC) × invested capital.
$$EVA = NOPAT - C \times k$$$$EVA = (ROIC - WACC) \times C$$How to Use
- Enter NOPAT.
- Enter invested capital and WACC.
- The tool returns the capital charge and EVA.
Case Studies
Value created or destroyed?
NOPAT HK$800,000, capital HK$5,000,000, WACC 9%.
Capital charge = 5,000,000 × 9% = HK$450,000.
EVA = 800,000 − 450,000 = HK$350,000 (>0 → value created).
FAQ
Is EVA the same as economic profit?
Substantially. EVA is a specific (Stern Stewart) brand of economic profit; both = NOPAT − capital charge. Strict EVA adds accounting adjustments; this tool uses the simple form.
What does negative EVA mean?
The business earns below its cost of capital — it destroys shareholder value even with an accounting profit. Improve returns or redeploy capital.
What is WACC?
The weighted average cost of capital — the blended required return on debt and equity. Use your firm's WACC.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.