| HBS Case Collection
(Revised from original 2005 version)
Understanding Economic Value Added
Explores the concept of economic value added (EVA) and its practical applications as a management control system for performance measurement and incentive compensation. Explains how EVA is measured and explores some of the adjustments to financial statements that are required to measure EVA. Provides a fully worked example of a firm's measurement of its EVA, both before and after adjustments to its financial statements. Describes several types of EVA bonus schemes and discusses both the benefits and limitations of EVA.
Desai, Mihir A., Fabrizio Ferri, and Steve Treadwell. "Understanding Economic Value Added." Harvard Business School Background Note 206-016, July 2006. (Revised from original November 2005 version.)