Input net operating profit after tax.
Provide total invested capital (debt + equity).
Use your weighted average cost of capital percentage.
Review EVA, ROIC, and the value-creation category.
EVA reframes profitability by accounting for ALL capital costs, not just debt interest. Accounting profit ignores the opportunity cost of equity capital — but that capital has a cost too, equal to what shareholders could earn elsewhere at similar risk. A business with positive accounting profit but ROIC below WACC is destroying value: it's earning less than the minimum required to compensate investors, even if it's not technically losing money.
EVA = NOPAT − (Invested Capital × WACC)
Positive EVA = creating value above the cost of capital
Negative EVA = destroying value, even if accounting profit is positive
EVA is what shareholders actually care about — accounting profit can mislead
Increase EVA by raising NOPAT, reducing invested capital, or lowering WACC
ROIC > WACC by 5%+ is strong value creation
Most public companies have ROIC close to WACC — only the best create significant EVA
Economic Value Added (EVA) is a financial performance metric that answers a question traditional accounting profit ignores: is the business earning more than its total cost of capital? A company can report positive net income and still destroy shareholder value if its return on invested capital falls below its weighted average cost of capital (WACC). EVA quantifies this by subtracting the capital charge (invested capital multiplied by WACC) from net operating profit after taxes (NOPAT). A positive EVA means the company is generating returns above what investors could earn elsewhere at comparable risk — it is genuinely creating wealth. A negative EVA signals value destruction regardless of what the income statement shows. Developed by Stern Stewart & Co. in the 1990s, EVA has been adopted by companies like Coca-Cola, Siemens, and Infosys as a core performance and compensation metric. This EVA calculator computes NOPAT from operating income and tax rate, calculates invested capital, applies your WACC, and delivers the EVA result with a clear breakdown. It also computes EVA margin and return on invested capital (ROIC) to give you a complete picture of whether a business is creating or destroying economic value.
Accounting profit can be misleading because it ignores the cost of equity capital. A company can post positive net income while actually destroying value if its returns don't exceed what investors could earn elsewhere. EVA forces businesses to pass a higher bar — beat your cost of capital — and is the framework many investors use to evaluate management performance and capital allocation decisions.
Data sourced from trusted institutions
All formulas verified against official standards.