E12-25A. (Learning Objective 5: Using economic value added to measure corporate performance) Two companies with different economic-value-added (EVA®) profiles are Barton Oil Pipeline Incorporated and Crompton Bank Limited. Adapted versions of the two companies’ financial statements are presented here (in millions):

Requirements 1. Before performing any calculations, which company do you think represents the better investment?
Give your reason.
2. Compute the EVA® for each company and then decide which company’s shares you would rather hold as an investment. Assume both companies’ cost of capital is 8.5% and use unadjusted net income in your calculations.

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Balance Sheet data: Total assets. Interest-bearing debt. All other liabilities.... Shareholders' equity. Total liabilities and equity.. Income Statement data: Total revenue. Interest expense.. Net income........ Barton Oil Pipeline Inc. Crompton Bank Limited $ 4,338 $14,000 $ 1,257 13 2,675 2,605 406 11,382 $ 4,338 $14,000 $11,000 $ 3,800 75 6 $ 190 $ 1,230