Economic Value Added (EVA) is a measure of a company’s financial performance that represents the value created in excess of the required return of the company’s capital providers. It captures whether a company is generating returns above its true cost of capital, which distinguishes it from purely accounting-based measures such as Net Income.

The formula is as follows:

\[\text{NOPAT} = \text{EBIT} \cdot (1 - \text{Effective Tax Rate})\] \[\text{Invested Capital} = \text{Total Equity} + \text{Total Debt}\] \[\text{EVA} = \text{NOPAT} - (\text{Weighted Average Cost of Capital} \cdot \text{Invested Capital})\]

Also known as: EVA, economic profit.

No programming experience? With the Finance Toolkit MCP server, AI assistants such as Claude and ChatGPT can calculate the Economic Value Added (EVA) for you. Just ask in plain English.

Calculate the Economic Value Added (EVA) in Python

The Economic Value Added (EVA) is available in the Models module of the open-source Finance Toolkit. Install it with:

pip install financetoolkit -U

Then call get_economic_value_added as shown below.

from financetoolkit import Toolkit

toolkit = Toolkit(["AAPL", "MSFT"], api_key="FINANCIAL_MODELING_PREP_KEY")

toolkit.models.get_economic_value_added().loc["AAPL"]

Which returns:

  2021 2022
Net Operating Profit After Taxes 9.69732e+10 1.02259e+11
Invested Capital 1.93614e+11 1.91382e+11
Weighted Average Cost of Capital 0.3598 -0.2326
Economic Value Added 2.73107e+10 1.46775e+11

Parameters

get_economic_value_added accepts the following parameters:

  • rounding (int, optional): The number of decimals to round the results to. Defaults to None.
  • growth (bool, optional): Whether to calculate the growth of the values. Defaults to False.
  • lag (int | list[int], optional): The lag to use for the growth calculation. Defaults to 1.
  • standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
  • trailing (int | None, optional): The trailing period to use for the calculation. Defaults to None.
  • show_columns (list[str] | None, optional): List of columns to show in the results. If None, all columns will be shown. Defaults to None.
DuPont Analysis Extended DuPont Analysis Enterprise Value Breakdown Weighted Average Cost of Capital (WACC) Intrinsic Valuation Gordon Growth Model (GGM) Altman Z-Score Piotroski Score Beneish M-Score Present Value of Growth Opportunities (PVGO) Sustainable Growth Rate (SGR) Internal Growth Rate (IGR)

The Models module page introduces the module, and the sidebar lists all of its functions.

Share