A Theoretical Exploration of Economic Value Added (Eva) and Market Value Added (Mva) as Measures of Corporate Performance

Corporate finance revolves around the efficient management of a company’s financial resources to maximize shareholder value. In this context, performance metrics serve as critical tools for assessing a firm’s operational efficiency, financial health, and value creation capabilities. Traditional metrics such as Return on Equity (ROE), Return on Assets (ROA), Earnings Per Share (EPS), and Net Profit Margin have long been used to evaluate performance. However, these accounting-based indicators often fall short in capturing the true economic value generated by a firm, leading to the development of more sophisticated, value-based metrics like Economic Value Added (EVA), Market Value Added (MVA), and Cash Flow Return on Investment (CFROI).