John Deere defines SVA as operating profit before income taxes and, less an estimated pretax cost of capital employed.

• ? How does SVA compare to EVA, RI, and ROI?
• ? What are some potential issues with the SVA measure?

John Deere: Shareholder Value Added John Deere is a pioneer of the Shareholder Added Approach (SVA). 2. Rigorous financial discipline. Deere has embraced a system called shareholder value added (SVA) that, simply put, measures the difference between operating profit and the company's cost of capital. \"We estimate productivity and cost, and go through a basic analysis and determine if we can compete,\" says Lane. Every factory and every product gets graded. And compensation for everyone from top management to unionized labor is based in some respect on SVA. \"Nobody gets paid at Deere for just making money,\" Lane explains. \"Everything is a ratio of what we earn over what we invest.\" That gives the whole organization an incentive to drive down costs. \"For 30 consecutive quarters, we have reduced inventory and the ratio of receivables to sales,\" Lane says. \"That is a huge reduction in the amount of capital that had to be deployed. In the process, we are getting faster and faster at providing the right products to the right customers at the right time.\" John Deere defines SVA as operating profit before income taxes and, less an estimated pretax cost of capital employed. How does SVA compare to EVA, RI, and ROI? What are some potential issues with the SVA measure