Financial Performance Index and Economic Value Added: A Comparison

Mohanty, Pitabas and Sahoo, Biresh (2001) Financial Performance Index and Economic Value Added: A Comparison. TAPMI, Manipal.

TWP27_01_Financial Performance.pdf

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Though Economic Value Added (EVA) is being increasingly used by the companies world over for performance measurement, it has certain limitations. In this paper an attempt is made to develop an alternative measure of fmn performance, Financial Performance Index (FPI), using data envelopment analysis. We here retain the desirable features of EVA and at the same time attempt to address some of the limitations of EVA. The results reveal that our performance index outperforms EVA as a performance measurement tool. We also find that FPI is a better predictor of stock returns. Therefore, FPI tells us not only which companies have performed well, it also tells us which stocks to invest our money in.

Item Type: TAPMI Working Papers
Uncontrolled Keywords: EVA; FPI; DEA; AFRs; Financial Performance Index; Economic Value Added
Subjects: Finance
Finance > Financial Economics
Divisions: Finance and Strategy
Depositing User: Ms. Vanitha K
Date Deposited: 17 Nov 2018 06:47
Last Modified: 21 Nov 2018 09:20

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