Explain the difference between roi and eva as a performance

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As a CFO, you are evaluating the performance of three divisions of your company using both measures-Return on Investment (ROI; %) and Economic Value Added (EVA; $). Note that ROI is measured by dividing net income by the total capital employed.

Problem 1: Explain the difference between ROI and EVA as a performance measure, other than their units (% vs. $). If in a given year a division has a positive ROI but a negative EVA, what would that mean? Explain also why that would happen.

Reference no: EM132802329

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