Economic value added (EVA) is a tool by which division managers can correct failures of accounting- driven or sales-driven evaluation systems. EVA addresses the shortcomings of these performance measures while at the same time including a cost most measures omit – the cost of capital, or the cost of financing the firm’s operations with debt and equity. EVA is roughly equal to after-tax operating profit minus the firm’s dollar cost of capital. If EVA is positive, management has added value to the firm; if it is negative, shareholder wealth has been harmed. In sum, EVA is a measure of financial performance trade-marked by Stern, Stewart & Co. equal to a firm’s net operating profit after tax (NOPAT) minus a capital charge representing the required return to shareholders.