Economic Value Added (EVA) Calculator
Economic value added measures whether a business earned more than the cost of the capital it used. Accounting profit ignores the required return on equity, so a firm can look profitable yet still destroy value. EVA fixes this by subtracting a capital charge, the weighted average cost of capital times invested capital, from net operating profit after tax. This calculator takes NOPAT, invested capital, and your WACC, then returns the capital charge, return on invested capital, and the resulting EVA in dollars. WACC is a user input you set from your own estimate.
Economic value added formula
Capital charge = WACC * invested capital
Return on invested capital = NOPAT / invested capital
EVA = NOPAT - capital charge
EVA = (ROIC - WACC) * invested capital
NOPAT is net operating profit after tax, WACC is the weighted average cost of capital, and invested capital is the total capital employed in operations. EVA is positive only when ROIC exceeds WACC.
Interpreting EVA
- EVA was popularised as a performance measure by the consulting firm Stern Stewart and Co.
- Positive EVA signals that operations earned more than the required return on capital.
- A firm can have positive accounting profit yet negative EVA if ROIC is below WACC.
- EVA is widely used in management incentive plans to align pay with value creation.
- The result is only as reliable as the WACC and capital figures you enter.
Economic value added: frequently asked questions
What is economic value added (EVA)?
Economic value added measures the dollar value a firm creates above the required return on its invested capital. It equals net operating profit after tax (NOPAT) minus a capital charge, where the capital charge is the weighted average cost of capital (WACC) multiplied by invested capital. Positive EVA means the firm earned more than its cost of capital.
What is the EVA formula?
EVA = NOPAT - (WACC * invested capital). Equivalently, EVA = (ROIC - WACC) * invested capital, where ROIC is the return on invested capital (NOPAT / invested capital). Both forms give the same result and this calculator reports both ROIC and the capital charge.
What is NOPAT?
NOPAT is net operating profit after tax: a firm's operating profit (EBIT) adjusted for taxes but before financing costs. It represents the cash operating earnings available to all capital providers, both debt and equity, independent of how the firm is financed.
What is invested capital?
Invested capital is the total capital a firm has put to work in operations, typically the sum of interest-bearing debt and equity, or equivalently net working capital plus net fixed assets. It is the base on which the capital charge is applied.
What does negative EVA mean?
Negative EVA means the firm earned less than the required return on its invested capital, so it destroyed economic value during the period even if accounting profit was positive. A firm can report a positive net income yet still post a negative EVA if its return on capital is below its cost of capital.
Official sources
- U.S. Securities and Exchange Commission: Cost of capital.
- U.S. Small Business Administration: Manage your finances.
Reviewed by the CalculatorHub team, edited by James Graham, 16 June 2026. See our methodology.