The concept of 'Economic Value Added' (EVA) is defined as:
A. Net operating profit after tax minus the opportunity cost of capital employed
B. Only accounting profit
C. Only cash flow
D. Only revenue minus explicit costs
Answer: Option A
Solution (By JKSSB Mock Tests)
Economic Value Added is a measure of residual income calculated as net operating profit after tax minus a charge for the opportunity cost of the capital employed in the business.
Explanation:
The Solow residual is the portion of output growth that cannot be explained by the growth of capital and labour inputs; it is attributed to technological progress or total factor productivity.
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