A financial model to determine the distortions in economic value added (EVA) caused by inflation

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dc.contributor.authorDe Villiers, J. U.en_ZA
dc.date.accessioned2013-01-23T11:47:16Z
dc.date.available2013-01-23T11:47:16Z
dc.date.issued2001
dc.descriptionCITATION: De Villiers, J. U. 2001. A financial model to determine the distortions in economic value added (EVA) caused by inflation. South African Journal of Economic and Management Sciences, 4(2):a2643, doi:10.4102/sajems.v4i2.2643.
dc.descriptionThe original publication is available at https://sajems.org
dc.description.abstractThis paper presents an algebraic model to study the extent to which inflation distorts Economic Value Added (EVA). The model consists of a theoretical firm in steady state, consisting entirely of projects with the same known internal rate of return. The EVA this firm reports is then calculated, and compared to the true economic profit calculated from the known return of the firm. The model shows that both conventional EVA and EVA based on the current value of assets are distorted by inflation. The distortion in the latter is more systematic, and this could form the basis of an adjusted EVA calculation to provide an estimate actual profitability.
dc.description.versionPublisher's version
dc.format.extent20 pages
dc.identifier.citationDe Villiers, J. U. 2001. A financial model to determine the distortions in economic value added (EVA) caused by inflation. South African Journal of Economic and Management Sciences, 4(2):a2643, doi:10.4102/sajems.v4i2.2643.
dc.identifier.issn2222-3436 (online)
dc.identifier.issn1015-8812 (print)
dc.identifier.urihttp://hdl.handle.net/10019.1/74042
dc.language.isoen
dc.publisherAOSIS
dc.rights.holderAuthor retains copyright
dc.subject.otherFinancial modelsen_ZA
dc.titleA financial model to determine the distortions in economic value added (EVA) caused by inflationen_ZA
dc.typeArticle
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