EVA Momentum: The One Ratio That Tells The Whole Story

Sponsored By EVA Dimensions LLC

Topics:

Budgeting & Planning > Business Performance Management , Business Intelligence

Finance & Risk Management > Benchmarking/Metrics

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Abstract:

Bennett Stewart, CEO of EVA Dimensions and principal creator of the EVA (economic value added) framework, has developed a performance metric that represents a true innovation. The metric is EVA Momentum. It is the ratio of the change in a company's economic profit in one period to its sales in the prior period. "EVA Momentum is the only ratio where bigger is always better," says Stewart. "It completely consolidates income efficiency, pricing power, business mix, asset management, profitable growth, and strategic retrenchment into one decisive score." Corporate executives can use it to compare performance across operating units and benchmark with peers, zero-in on weaknesses and target improvement opportunities, set credible but challenging goals, value strategic plans, and much more. "In my opinion," says Stewart, "EVA Momentum is the natural successor to the DuPont ROI formula. It is the culmination of everything I have learned about 'value-based' financial management."

DETAILS

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Released: August 24, 2009

Length: 13 pages

Format: PDF (483 kb)

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