Economic value added refers to the value of net operating profit after tax less the capital charge of the firm. It shows the marginal difference between the cost of capital and the required rate of return.
Part one Economic valued added computation
|
2017 |
2016 |
|
|
Net income before taxes |
503,000 |
262,300 |
|
Add back Interest |
63,000 |
58,500 |
|
Net operating profit after taxes ( NOPAT) |
566,000 |
320,800 |
|
Less capital invested |
821,760 |
756,000 |
|
Economic value added |
(255,760) |
(435,200) |
