EVA Articles

The Fortune Article That First "Broke" the EVA Momentum Story

Al Ehrbar | 2010-08-11

Many performance ratios lie about a company’s health,” writes Fortune Senior Editor Geoff Colvin in the “Value Driven” column that “broke” the EVA Momentum story. “A new metric has emerged that can’t easily be gamed—and savvy investors and managers will check it out.”   Please do.

How is Your Company Really Doing?

Al Ehrbar | 2010-08-11

If companies are to pay for performance, the first thing they have to know is exactly how well or poorly a company really is performing.

Abandon Earnings-Per-Share

Bennett Stewart | 2011-10-21

The most popular way to score corporate performance is with earnings per share, or EPS for short.  It’s the authorized, mandated, regulated version of profit as computed according to generally accepted accounting principles. But while EPS certainly wins on tradition and establishment connections, it loses on every other count. It is riddled with pitfalls and pratfalls that make it a highly unreliable measure of value and a misleading guide to corporate performance. Its time has come and gone, and it must go.

Executive Summary: What Really Determines Total Shareholder Return?

Bennett Stewart | 2011-10-21

TSR has become an increasingly important metric.  But what really determines TSR?  How can boards and business leaders best structure incentives and manage the business and grade plans to ensure the firm delivers outstanding shareholder returns?  In this paper, Bennett Stewart discusses a breakthrough derivation that traces TSR from dividends and capital gains directly to earning and increasing EVA.  In short, if TSR is the question, then EVA is a very good answer every company should consider

Is Your Finance Fuzzy or Focused

Bennett Stewart | 2011-10-21

Most companies use bloated finance—cash flow for capital budgeting and valuations, ROI and the like for judging performance, bonuses hitched to budgets for EBITDA and margins, and top line board measures like EPS and ROE.  It is complex, ambiguous, and rife with contradictions.  It stifles initiative and teamwork and real strategic thinking.  It saps vitality and is a drag on creating value. It’s the status quo and is in dire need of repair.  Here’s how.