Economic Value Added (EVA) is a financial performance measure that calculates a company's profitability after accounting for the cost of capital. It helps assess whether a company is generating value beyond its expenses, including the cost of equity and debt. A positive EVA indicates that a company is creating wealth for its shareholders, while a negative EVA suggests the opposite. EVA is often used by businesses to evaluate their operational efficiency and investment decisions. By focusing on the true economic profit, companies can make better strategic choices that align with their long-term goals, ultimately enhancing shareholder value and overall performance.