This research is to assess the effectiveness and usefulness of EVA which is considered as a valuable tool for choosing among alternative financial investments in the modern world of business that can protect against shareholder’s value destruction. The aim is to know the various benefits an organization can derived from the utilization of Economic Value Added.
In line with this, the research aim is also to know the approaches and assumptions of EVA, to determine how effective EVA is in protecting the shareholders’ value.
In order that the above mentioned objectives of this research can be achieved, the researcher will employ a normative survey wherein, formulated questionnaires will be filled out by the chosen respondents. The gathered data will be treated by getting the frequencies and after which, it will be analyzed and presented.
1. What are the advantages of EVA system in an organization?
2. What are the critics of EVA System?
3.1. Research objectives
The researcher of this proposal will be guided by the following objectives which particularly aim to:
To know the advantages of EVA for an organization.
To know the critics of EVA
4.0. Literature Review
Here I will see some literatures and find out the lacking point. From the definition of EVA it can be clearly identified that the main components of EVA are net operating profit after tax (NOPAT) and capital charge of an organization. But the actual calculation of EVA is somewhat complicated, as it requires a number of decisions about:
1. How to properly measure net operating profit after taxes;
2. How to measure capital; and
3. How to determine cost of capital.
5.0. Benefits of the study
This is because this research proposal will show the different benefits that can be attained in the implementation of EVA system. Moreover, the fears of the businessmen on the perceived disadvantages in the implementation...