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Basics of Economic Profit (aka Economic Value Added)

Definitions Economic Profit (EVA) = Net Operating Profit After Taxes (NOPAT) – Capital Charge = NOPAT – (Cost of Capital * Invested Capital) = (NOPAT / Invested Capital) * Invested Capital – (Cost of Capital * Invested Capital) = (Return on Investment – Cost of Capital) * Invested Capital Invested Capital = Working Capital + … Continue reading

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