Economic Value Added and Small Businesses

  • Charles P. Baril James Madison University
  • S. Brooks Marshall James Madison University
  • Robert F. Sartelle Virginia Corporation Commission

Abstract

Economic Value Added (EVA), a tool for creating wealth, is a leading idea in corporate finance today. Highly regarded companies like Coca-Cola and CSX have seen their market value soar since adopting EVA. The concept is straightforward; value is created when earnings exceed the cost of invested capital. Thus, EVA is rapidly gaining acceptance among large, publicly-traded corporations. However, EVA can be applied effectively to create value in small, privately-held firms, too. This article illustrates EVA's application in small, privately-held firms, examines EVA "s strengths and weaknesses, discusses ways to overcome those weaknesses, and describes specific operating, investing and financing actions small business managers can take to create wealth.

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References

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Published
1997-06-16
How to Cite
BARIL, Charles P.; MARSHALL, S. Brooks; SARTELLE, Robert F.. Economic Value Added and Small Businesses. Journal of Small Business Strategy, [S.l.], v. 8, n. 2, p. 67-78, june 1997. ISSN 2380-1751. Available at: <https://libjournals.mtsu.edu/index.php/jsbs/article/view/370>. Date accessed: 15 june 2019.
Section
Articles