Reason 2: EVA is more practical and understandable than rate of return (ROI...) (4/4)

• Profitability is often viewed as a difficult construct belonging to financial professional although it is in general outline an easy consept understandable to all employees - the question is ultimately whether a company can cover all its costs or not and how much is the excess or deficit

• EVA clarifies the profitability into one unambigious and absolute figure. Thereafter improving profitability is simply increasing EVA
  • After implementing EVA it is fairly easy to explain to all employer groups what is profitability and where should the company aim at financially

• The reason for difficulties for operating people to understand profitability have not been in the consept itself but with the performance measures (like ROI) used so far