Lohorman Corp is a major supplier to makers of outdoor power equipment. According to the company's annual report, "management subscribes to the premise that the value of our company is enhanced if the capital invested in its operations yields a cash return that is greater than that expected by the provides of capital."
The following data are from Lohmann's aual report that incorporate EVA adjustments to operating profit and average invested capital
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20X1
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20X2
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Adusted before tax operating profit
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$78,000
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$80,000
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Cash taxes
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$20,500
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$22,600
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adjusted average invested capital
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$650,000
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$600,000
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cost of capital
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9.40%
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9.40%
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1.Compute the EVA for Lohmann for 20X1 and 20X2
2.Did Lohmann's overall performance improve from 20X1 to 20X2? Explain.