A Study on Economic Value Added as a Measure of Financial Performance

1.   Ms.R. Javiprabha

MBA, NET, Assistant Professor, School of Management, Dhanalakshmi Srinivasan University, Trichy, Tamilnadu – 621112.

Email : javiprabha.som@dsuniversity.ac.in

2.   Mr. C.Vignesh – 11724500110

MBA,School of Management, Dhanalakshmi Srinivasan University,Trichy, Tamilnadu – 621112.

Abstract:Economic Value Added (EVA) has emerged as a robust financial performance metric that captures true economic profit by incorporating the cost of capital into performance evaluation. Unlike traditional accounting measures such as net profit or return on investment, EVA provides a value-based perspective by assessing whether a firm generates returns above its cost of capital. This study explores EVA as a comprehensive indicator of financial performance and examines its relationship with firm profitability, shareholder value creation, and operational efficiency. Using regression analysis and ANOVA, the study evaluates the impact of key financial variables on EVA. The findings suggest that EVA is significantly influenced by capital structure, operating profit, and cost of capital, reinforcing its relevance as a superior performance metric. The study contributes to financial literature by integrating hypothesis testing and empirical modeling to validate EVA's effectiveness in strategic financial decision-making.