Open AccessEconomic Value Added: Acritical Reading
Author(s) -
Ibrahim R. I. Elmadhoun,
Mohammed H. K. Murtaja
Publication year - 2022
Publication title -
international journal for research in applied science and engineering technology
Language(s) - English
Resource type - Journals
ISSN - 2321-9653
DOI - 10.22214/ijraset.2022.40450
Subject(s) - economic value added , measure (data warehouse) , profit (economics) , value (mathematics) , shareholder value , market value added , economics , shareholder , criticism , market value , accounting , earnings before interest and taxes , microeconomics , business , finance , computer science , mathematics , statistics , art , corporate governance , literature , database
It is clear how important is the measure of Economic Value-Added and preference that this measure has over traditional performance measures. This measure is based on creating value for the company, and this measure is distinguished by taking into account invested capital, whether owned or borrowed. In addition, studies have shown that the measure of Economic Value Added increases the performance of the company and the performance of the management working. This measure affects the market value of the company and its use leads to maximizing the wealth of shareholders, and like all performance measures he has supporters and has critics. One of the criticisms directed against him is that he measures performance on the short level, as he cares about results, not causes, and the most important criticism directed at him is his dependence on accounting profit in the financial statements whether these statements represent the actual performance of the company or not. Keywords: Economic Value Added, Profit Indicator, Financial Management