Page 122 - MAC4861_2 Costing class slides part 2

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
replacement values are
Plus: net working capital not given

Plus: capitalised expenses

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