Hardcover - 254 pages (November 1998)
John Wiley and Sons; ISBN: 0471298603
EVA - "economic value added" - is a measure of the true financial performance of a company, and a strategy for creating corporate and shareholder wealth. It is also a method of changing corporate priorities throughout a company, so that the focus is on the creation of wealth, to the benefit of everyone. This book features real case histories of companies such as Coca-Cola which have used EVA to produce successful financial results.
From the Inside Flap
Called "today's hottest financial idea and getting hotter" by FORTUNE magazine, Economic Value Added (EVA) is the topic of conversation in financial circles around the world, from Germany and Japan to Singapore and South Africa. A revolutionary strategy for creating corporate and shareholder wealth that measures a company's real profitability, it has been adopted by such prominent corporations as Coca-Cola, Eli Lilly, and Siemens AG - with spectacular financial results. Yet, despite its increasing visibility, most executives still only have a vague notion of what EVA is and what it can do for their company. This groundbreaking book explains and clarifies all. Written by Al Ehrbar, a leading business journalist and senior vice president at EVA inventor Stern Stewart & Co., EVA: The Real Key to Creating Wealth provides a complete accessible overview that examines how EVA works, how it is measures, that it can do to structure incentives for employees, and why it is as potent as it is. At its most basic, Economic Value Added is a measure of corporate performance that differs from most others by charging profit for the cost of all capital a company employs, including equity. However, as Ehrbar explains, EVA is much more: "It is the framework for a complete financial management and incentive compensation system that can guide every decision a company makes...that can transform corporate culture that can improve the working lives of everyone in an organization by making them more successful, and that can help them produce greater wealth for shareholders, customers, and themselves."
To help translate principle into real-world practice, Ehrbar presents reveling case histories of EVA success stories, including those of Briggs & Stratton, the U.S. Postal Service, and Coca-Cola, which was catapulted from mediocrity to the number one wealth creator in the world with the addition of EVA. An in-depth look at a breakthrough idea whose impact is being felt from corporate boardrooms to Wall Street, this indispensable book is must reading for business leaders looking to fully grasp - profit from - "the key to creating wealth."
From the Back Cover
"Today's hottest financial idea and getting hotter."
- Fortune
"For corporate directors who still believe that they are doing the best for shareholders by focusing on earnings per share (or any of a hundred other popular but easily manipulated accounting targets), this book is must reading."
- Merton H. Miller, Nobel Laureate in Economics
"EVA: The Real Key to Creating Wealth is right on the mark, blending sound economic theory and real-world application. This book shows in a clear and compelling way how EVA can be a competitiveadvantage in the race to create shareholder value."
- William T. Esrey, Chairman and Chief Executive Officer, Sprint Corporation
"EVA: The Real Key to Creating Wealth does a masterful job of blending the theoretical and the practical. It demonstrates conclusively - and once and for all - how EVA actually changes the behavior of employees."
- Alfred J. Jackson, Director of Global Equity Research, Credit Suisse First Boston
"The blindingly simple insight that business is primarily about economics, not about accounting, is one of the most important achievements in modern business thought. It's an insight with many implications, and it offers everyone who works in business a set of useful tools to make better decisions and thereby create more value for shareholders."
- Bob Shapiro, Chairman and CEO, Monsanto Company
"EVA is the 'invisible hand' which can lead managers and workers to create wealth for themselves, and in doing so enrich owners."
- Bob L. Boldt, Senior Investment Officer, California Public Employees' Retirement System (CalPERS)
"Al Ehrbar has clearly articulated what drives stock prices over the long run. His message is useful to both investors and business managers, and the case histories in his book demonstrate what can be accomplished to the basic principles of EVA."
- Eugene B. Vesell, Managing Director, Oppenheimer Capital
About the Author
Al Ehrbar is a senior vice president at Stern
Stewart & Co. A leading business and financial journalist, he has been
senior editor at FORTUNE magazine, editor and publisher at CORPORATE FINANCE
magazine, and senior economics writer at the Wall Street Journal. He is
the recipient of numerous awards for journalistic excellence.
