Economic Value Added (EVA): A Better Performance Indicator- The Case Study of Square Pharmaceuticals Limited

Economic Value Added (EVA) attempts to understand whether a business creates sufficient surplus to cover the cost of its capital or to fulfill the shareholders expectation into value creation. The concept of EVA is better than that of the conceptof accounting profit as a tool of value creation because it considers the overall costof capital. The purpose of this study is to examine and analyze the financial performance of Square Pharmaceuticals Limited (SPL) on the basis of traditional measurement tools like ROCE, ROE, EPS etc and the new performance measure EVA. The study also includes the empirical findings of a few research work done on the theoretical relationship of EVA to other financial fundamentals. Finally, the study findings that the relationship between ROCE and EVA highly positive correlation and the traditional performance indicate are showing high value compared to EVACE.