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Compared to Accounting Profits, Why Is EVA a Better Measure

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Essay

Compared to accounting profits, why is EVA a better measure of a company's performance? What might happen to a manager if his or her plant earns a negative EVA?


Definitions:

Obligation

Refers to a duty or commitment that an individual feels bound to perform, often driven by moral or legal reasons.

Scientific Thinking

The application of scientific method and reasoning, including observation, hypothesis formation, experimentation, and conclusion to solve problems.

Organizational Behavior

Organizational behavior is the study of how individuals and groups interact within organizations and how these interactions affect organizational performance.

Data Collection

The process of gathering and measuring information on variables of interest, in a systematic fashion that enables one to answer stated research questions, test hypotheses, and evaluate outcomes.

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