Which Statement Regarding EVA Is True

question 49

Multiple Choice

Which statement regarding EVA is true?

• A)One way to increase EVA is to achieve the same level of operating income but with more investor-supplied capital.
• B)If a firm reports positive net income, its EVA must also be positive.
• C)One drawback of EVA as a performance measure is that it mistakenly assumes that equity capital is free.
• D)One way to increase EVA is to generate the same level of operating income but with less investor-supplied capital.

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Definitions:

Inflated Self-esteem

An excessively high regard for one's own worth, abilities, or significance, which can sometimes cross into the territory of narcissism or exhibit as a symptom in bipolar disorder during manic phases.

Decreased Need For Sleep

A symptom often associated with certain psychiatric conditions where the individual feels less need to sleep without experiencing fatigue.

Premenstrual Dysphoric Disorder

A severe form of premenstrual syndrome (PMS) characterized by significant mood swings, irritability, depression, and other emotional distress.

Clinically Significant

A measure of the practical importance of a research result, indicating that a finding has meaningful implications in a clinical setting.