How this calculator works
Subtract the opportunity cost of invested capital from after-tax operating profit. Match an annual capital cost with annual NOPAT and use a consistent beginning or average capital base. This is a basic economic-profit calculation; branded EVA implementations can make further accounting adjustments.
Formula
EVA = NOPAT - invested capital × WACC. Equivalently, EVA = (ROIC - WACC) × invested capital. A simplified operating capital proxy is total assets minus non-interest-bearing current liabilities.
Worked example
$200,000 NOPAT on $1,500,000 invested capital at 8% WACC leaves $80,000 economic profit. At $100,000 NOPAT with the same capital and rate, EVA is -$20,000.
Frequently asked questions
What is NOPAT?
Net operating profit after tax excludes financing interest, so the capital charge can account for debt and equity together.
Can EVA be negative?
Yes. A company can report accounting profit while earning less than the opportunity cost of its capital.
Which liabilities should reduce operating capital?
Only non-interest-bearing operating liabilities in the simplified asset-based mode. Deducting interest-bearing debt would mix financing and operating definitions.