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Main advantage of EVA

The main advantage of using EVA is that it is simple to calculate and understand. It uses simple measures like operating profits and cost of capital terms which are widely known and accepted in the financial arena. It helps the managers to assess their assts and income carefully. The concept is also well understood by the shareholders as they can understand by comparing EVA of different years and analyze the wealth that has been created for them by use of their funds. It helps the managers to take principal financial decisions w.r.t creation of wealth.

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