Keywords : EVA- Economic Value added, ROCE – Return on capital employed Traditional accounting measures, Value based measure, accounting profit, Economic Profit.

Abstract : In the recent competitive market, the main focus of every company is to satisfy its shareholders by giving maximum value towards its investment. Value creation become the most important objective of business financial strategy. To measure their financial positions many traditional tools are there like Return on equity (ROE), Return on Net worth (RONW), Return on capital employed (ROCE), Earning per share (EPS) etc., But there is a limitation of traditional measure that it does not consider the overall cost of capital which includes equity capital. To overcome this limitation value-based measures were introduced in which one of the measures is Economic Value added (EVA). EVA has been introduced by Stern Stewart and company in 1991 it has fulfilled the limitation of traditional measure and includes the overall cost of capital. EVA gain popularity in the modern era as a value-based measure and it is used to measure the performance of a company. Also, it guiding shareholders towards their investment decisions and help them to identified whether a company is creating or destroying the value of their investment. Here, in this paper, we tried to analyzed financial performance of ACC Limited by using Economic Value Added and also tried to know is EVA is better than the traditional measure ROCE.

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