EVA®; Shareholder Value Analysis and Sustainability; Internet-Based Research Increasing shareholder value is a key objective for many profit-seeking organizations. As indicated in the chapter, EVA® is...

EVA®; Shareholder Value Analysis and Sustainability; Internet-Based Research Increasing shareholder value is a key objective for many profit-seeking organizations. As indicated in the chapter, EVA® is meant to approximate economic income and, in this sense, can be viewed as a measure of shareholder value added by the firm during a period. Increasingly, managers are realizing that shareholder value is enhanced by creating value for employees, customers, suppliers, the community, and other stakeholders. This problem asks you to consider how EVA®, as a measure of economic value created during a period, can be used to guide and justify sustainability-related investments.

Required 1. How is economic value added (EVA®) for any accounting period estimated? How does this financialperformance metric differ from both conventional accounting income and from residual income (RI? 2. Given the definition of EVA® you provided in requirement 1, provide some thoughts as to how EVA® can be used as part of a comprehensive performance management system to assess and justify corporate investments in sustainability-related projects. 3. Search the internet to see whether you can identify an example of how an actual company used EVA® to support a sustainability-related investment project or program (i.e., one that dealt with social or environmental performance). 4. Explain how EVA®, as a financial performance metric, can be used as part of a larger strategic management system.