Capital - money invested in the net assets employed in the business.
Cost of Capital - the cost of debt (borrowed money) and the cost of equity at the predetermined cost. SPX's cost of capital for 1996 is 11%.
EVA - economic value added is the economic profit after subtracting the cost of all capital employed in the business.
EVA Drivers - actions that influence EVA. Key drivers are to grow, improve efficiencies, and to reallocate capital.
Excess Improvement - the improvement in EVA in excess of the expected improvement.
Expected Improvement (EI) - the improvement in EVA required to meet investor expectations implicit in our share price.
NOPAT - net operating profit after taxes adjusted using SPX's definition of EVA.
Value Creation - creating market value in excess of book value. Creating economic profit after subtracting the cost of all capital employed.
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