Implicit costs in measuring firms profitability

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Reference no: EM13850577

Some major companies live and die by EVA. For example, at General Electric, more capital is allotted only to divisions that pass the EVA threshold and divisions that regularly flunk are sold off. It’s a simple, but powerful, approach that looks at a company’s numbers from an economist’s point of view and factors in not just explicit costs but also implicit costs in measuring a firm’s profitability. What do you think of EVA?

Reference no: EM13850577

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