Stern Stewart's Economic Value Adde

Stern Stewart's Economic Value Added and Market Value Added models receive strong acceptance and use despite the relative youth of the methods. Stern Stewart argues that Economic Value Added is the financial performance measure that comes closer than any other to capturing the economic profit of an enterprise. They define Economic Value Added as the difference between a firm's net operating after tax income and the cost of capital while Market Value Added is a cumulative measure of wealth creation. Economic Value Added was used half of the respondent while Market Value Added was used by approximately one third.