Eva net operating profit after tax calculation formula

EVA (Economic Value Added) net operating profit after tax calculation formula is EVA= net profit after tax-(total capital × capital cost rate). Among them, the total capital includes owner's equity and liabilities, and the cost of capital rate depends on the risk degree of the company.

EVA is an index used to measure the economic benefits of enterprises, and its core idea is to deduct the cost of capital from the net profit to reflect the actual use efficiency of capital. The calculation formula of EVA net operating profit after tax is as follows: EVA = net profit after tax-total capital × cost rate of capital, in which total capital includes owner's equity and liabilities. The cost of capital rate is determined according to the risk degree of the company, and is usually calculated by the company's weighted average cost of capital (WACC) or equity risk premium (ERP). The calculation method of EVA aims to reflect whether the actual rate of return of the enterprise relative to the occupied capital is higher than the cost of capital. If EVA is positive, it means that the operating income of the enterprise is higher than the expected income of investors, and vice versa. It should be noted that the after-tax net profit in EVA calculation formula refers to the after-tax net profit obtained by the enterprise after deducting various expenses. Total capital includes owner's equity and liabilities. At the same time, it should be noted that the risk degree of the company should be considered when calculating the capital cost rate.

What's the difference between EVA and ROE? What are their application scenarios? EVA and ROE are both indicators to measure the economic benefits of enterprises, but their calculation methods and application scenarios are different. EVA measures the actual economic value obtained by an enterprise from the perspective of investors, and measures the economic added value of an enterprise by deducting the cost of capital from the net profit, reflecting the efficiency of the use of funds by an enterprise. It is suitable for evaluating the economic growth and resource allocation efficiency of enterprises. ROE, on the other hand, measures the rate of return on shareholders' equity from the perspective of shareholders, and the core is profit distribution and profitability of enterprises. It is suitable for evaluating the rate of return on shareholders' equity and enterprise management ability.

EVA is an important index to measure the economic benefits of enterprises. It reflects the actual use efficiency of enterprise funds by deducting the cost of funds from net profit. A correct understanding of EVA's calculation method and application scenarios is conducive to improving the operational efficiency of enterprises, reducing investment risks and increasing the economic added value of enterprises.

Legal basis:

Article 2 of the Individual Income Tax Law of People's Republic of China (PRC) shall pay individual income tax:

(1) Income from wages and salaries;

(2) Income from remuneration for labor services;

(3) Income from remuneration;

(4) Income from royalties;

(5) Operating income;

(6) Income from interest, dividends and bonuses;

(7) Income from property lease;

(8) Income from property transfer;

(9) Accidental income. Individual residents who obtain income from items 1 to 4 of the preceding paragraph (hereinafter referred to as comprehensive income) shall calculate individual income tax according to the tax year; Non-resident individuals who obtain income from items 1 to 4 of the preceding paragraph shall calculate individual income tax on a monthly or itemized basis. Taxpayers who obtain income from items 5 to 9 of the preceding paragraph shall calculate individual income tax separately in accordance with the provisions of this law.