Economic Value Added Is Calculated From

question 26

Multiple Choice

Economic value added is calculated from:

• A)Average total assets, current liabilities, net income, and the cost of capital.
• B)EVA net income and EVA invested capital.
• C)Net income, cost of capital, and net assets.
• D)Net income and the cost of capital.
• E)EVA net income, the cost of capital, and EVA invested capital.

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Definitions:

Marginal Tax Rate

The rate at which the next dollar of taxable income will be taxed.

Operating Costs

Expenses associated with the day-to-day functions of a business, excluding financial costs.

Depreciation

The accounting process of allocating the cost of tangible assets over their useful lives, reflecting the reduction in value over time.

Working Capital

The difference between a company's current assets and current liabilities, indicating the amount of liquid assets the company has available to build its business.