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```					                                                           ECONOMIC VALUE ADDED

Company tax rate                                    30%
Common stock outstanding                          90000
Market price per stock             \$              20.00

INCOME STATEMENT

EBIT                               \$        1,000,000.00
Interest on debt                   \$          220,000.00
Interest on preferred stock        \$           84,000.00
Profit before taxes                \$          696,000.00
Taxes                              \$          208,800.00
Net income                         \$          487,200.00
Tax adjustment on interest         \$          212,800.00
Income adjusted for the tax        \$          700,000.00

Weighted Average Cost of Capital                 11.93%

CAPITAL STRUCTURE
Amount                              Cost of Capital   Average cost
Common stock                       \$        1,800,000.00                          18%      7.200%
Preferred stock                    \$          700,000.00                          12%      1.307%
Debt                               \$        2,000,000.00                          11%      3.422%
Total capital                      \$        4,500,000.00

\$     163,200.00
HOW TO CALCULATE ECONOMIC VALUE ADDED (EVA)

What is Economic Value Added (EVA)?

Economic Value Added is a calculation used to determine a company's economic profit, based on net operating profit after tax (NOPAT).
In this calculation, NOPAT is adjusted for the company's cost of investment in capital.

EVA is primarily used by companies to manage overall profitability and to evaluate capital investment decisions.

How is Economic Value Added calculated?

Step 1 - Calculate Net Operating Profit after Tax (NOPAT)

Refer to the Income Statement for NOPAT calculation and to update values.

Income Statement                                         Year 1            Year 2             Year 3             Year 4            Year 5
Sales                                         \$      8,529,880    \$   10,321,155     \$   11,198,453    \$    11,982,345    \$   12,701,285
- Cost of Goods Sold                          \$     (6,260,932)   \$   (7,575,728)    \$   (8,219,664)   \$    (8,795,041)   \$   (9,322,743)
- Operating Expenses                          \$     (1,219,115)   \$   (1,335,150)    \$   (1,370,529)   \$    (1,406,071)   \$   (1,442,016)
- Taxes                                       \$       (301,523)   \$     (434,524)    \$     (540,380)   \$      (695,531)   \$     (770,937)
= NOPAT                                       \$        748,310    \$      975,753     \$    1,067,880    \$     1,085,702    \$    1,165,589

Step 2 - Calculate Capital Charges

Refer to the Balance Sheet for Capital Charges calculation and to update values.

Invested Capital (Including Stock and Debt) x the Weighted Average Cost of Capital

Balance Sheet                                           Year 1             Year 2             Year 3             Year 4            Year 5
Common Stock                                  \$       800,000     \$      800,000     \$      800,000    \$       800,000    \$      800,000
+ Preferred Stock                             \$       200,000     \$      200,000     \$      20
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Description: This template spreadsheet can be used make an Economic Value Added (EVA) calculation. EVA is a calculation used to determine a company's economic profit, based on net operating profit after tax. Net operating profit after tax can be calculated from the company's income statement. Capital charges must also be calculated, which can be obtained from the company's balance sheet. The EVA equals the net operating profit after tax less the capital charges. EVA can be used by companies to measure the economic gain accomplished by a business in a given period.