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Fundas : Understanding Economic and Market Value Added (EVA & MVA)


While looking at earnings growth, one refers to growth in bottomline or net profits. These are also known as accounting profits. While there is no doubt that one needs to look at how earnings have fared over longer periods of time, the bigger question that would be interesting to answer is have these earnings created value?

As a shareholder or potential investor, the primary question on every investor’s mind is - Will the company create value? But what do investors look at or check to see if the company they are invested in or about to invest in creates value . . .

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