ECONOMIC VALUE ADDED: PROS AND CONS

In times of uncertainty and crisis the performance measurement instruments should be reanalyzed. Thus, alongside the classic indicators of performance, in business financial analysis can be used modern indicators which offer a greater flexibility and efficiency. Such a measurement indicator for financial results closely correlated with the requirement of maximizing shareholder wealth is the Economic Value Added (EVA). The economic value added reflects the real economic profits of a company and it is an effective tool for financial managers. Despite some limits, taking into account the usefulness of EVA indicator, many companies have adopted it as a part of a comprehensive management and at the same time, an incentive system that governs the financial decision-making process.