Drop down boxes:

1. book, market, replacement

2. maximized, zero, minimized

3. lower, higher

4.economic profit, accounting profit, net income

5. net worth, net income, cash flow

6. MVA, EPS, EVA

Accounting for Financial Management: EVA/MVA The financial statements reflect historical data, but managers' performance must be evaluated on the basis of -Select- Value Added (EVA). values. To provide this information, financial analysts have developed two measures: Market Value Added (MVA) and Economic Market Value Added represents the difference between the money stockholders have invested in the firm versus the cash they could receive if the firm were sold. The equation for MVA is: MVA = (Shares outstanding Stock price) - Total common equity Shareholder wealth is maximized when this difference is -Select- V. The -Select- va firm's MVA, the better the job management is doing for its shareholders. Economic Value Added is sometimes called " -Select- and it is closely related to MVA. The equation for EVA is: EVA = NOPAT - (Total net operating capital)(WACC) EVA differs from invested capital is equal to the sum of notes payable, long-term debt, and total common equity. EVA differs from -Select because EVA has a deduction for the cost of equity. Positive EVA on an annual basis helps ensure that MVA is also positive. -Select- can be determined for divisions as well as for the firm as a whole, so it is useful for establishing reasonable compensation for divisional managers as well as top company officers