Purpose and benefits

Economic value added (EVA) has transformed the corporate finance scene and business practice by transferring modern business theory from classroom to boardroom.
Traditional metrics, with their roots in accountancy, distort economic reality. For example, crucial long-term intangible investments often fall foul of traditional metrics.
If shareholder value is the goal, then the key to any metric must be the cost of capital, or shareholders’ required return.
At its best, EVA is not just a financial metric, it is a complete management system focused on value creation.