Page 67 - DCOM409_CONTEMPORARY_ACCOUNTING

Contemporary Accounting

Notes 3. Illustrate the approaches to compute EVA.
4. EVA calculation involves calculating the three figures NOPAT, TCE and WACC. Discuss.
5. Discuss various aspects of computation of Economic Value Added and its application in
business planning and valuation.
6. “EVA is a superior measure of corporate performance and reflects all the dimensions by
which management can increase value”. Elucidate.

7. What are the key steps of calculating EVA?
8. Make some suggestions to improve EVA.
9. What are the shortcomings of EVA?
10. CAPM is traditionally used by the founders of EVA. Discuss.

Answers: Self Assessment

1. false 2. false

3. true 4. true
5. true 6. rupee
7. CAPM 8. value added

9. WACC 10. compensation
11. trade-off 12. cost of equity
13. inflation 14. residual income
15. Residual income

4.9 Further Readings

Books Chandra, P., Financial Management - Theory and Practice, New Delhi, Tata McGraw
Hill Publishing Company Ltd., 2002, p. 3.
Sudhindra Bhat, Financial Management, New Delhi, Excel Books, 2008.
Van Horne, J.C. and Wachowicz, Jr, J.M., Fundamentals of Financial Management,
New Delhi, Prentice Hall of India Pvt. Ltd., 1996, p. 2.

Online links www.globusz.com

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