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PERFORMANCE MEASUREMENT
Economic Value Added (EVA ⁽™⁾)
Where, Adjusted NOPAT =
Profit before tax xxx
Add: interest expense xxx
Less: Tax (xxx)
NOPAT xxx
Necessary adjustments:
- Depreciation is ignored and holding gains and losses are taken into
account (changes in the market value of the asset)
- Capitalise expenses that have a value over a longer term than one year
and then amortize these expenses over the period the benefits are
received (advertising/ marketing/ research and development)
Assets and liabilities that
Where, Adjusted Controllable Investment = can be influenced by the
manager.
Replacement values of non current assets Use market values where
Plus: net working capital replacement values are
not given
Plus: capitalised expenses
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