Date: Thu, 18 Dec 1997 01:50:14 GMT Server: Apache/1.2b1 Connection: close Content-Type: text/html Last-Modified: Wed, 22 Oct 1997 11:52:35 GMT ETag: "10007-e89-344de903" Content-Length: 3721 Accept-Ranges: bytes SPX Corporation -- What is EVA

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EVA Formula
Net operating profit after-tax (NOPAT) is the profit after subtracting cost of sales, operating expenses, taxes and other adjustments from revenues.



The capital charge is the required, or minimum, rate of return necessary to compensate all investors, for the capital they have invested in the company. Capital is net assets (total assets minus current liabilities) and includes accounts receivable, inventory, property, plant and equipment less accounts payable and accruals. SPX's cost of capital for 1996 is 11%. To calculate the capital charge, multiply capital by 11%.



EVA or economic value added, is the economic profit left after subtracting the cost of all capital employed in the business.
EVA = NOPAT - Capital Charge.


EVA is a registered trademark of Stern Stewart & Co.

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