Economic value added (EVA) was coined by Stern & Stewart. The concept, however, has been around for many years but referred to as _______________________.

A) profitability measure.
B) excess return.
C) residual income.
D) prospective capacity.
E) return margin.

Economic Value Added

A measure of a company's financial performance based on the residual wealth calculated by deducting the cost of capital from its operating profit.

Residual Income

The amount of net income generated in excess of the minimum rate of return expected by shareholders or creditors, often used as a performance measure for investment or business valuation.

Stern & Stewart

A global management consulting firm known for its development of the Economic Value Added (EVA) concept.