Actually this concept is known since 1890, where he posed as Economic Value Added to the amount that is generated after the cost of capital get the value of the yield obtained.
This concept of Economic Value Added us to assess whether the return on investment complies with the rate of return with this take into account whether the benefit is less than the cost of capital.
These days the Economic Value Added is used as a powerful tool for company managers, using it as an indicator to assess the value creation performance and implement incentives to encourage those involved in highlighting the concept of Value Creation .
Buying the primary goal which focuses on the shareholders make the right decisions and are aimed at meeting the goals.
The term Economic Value Added is a transition from what was previously known as Residual Income, which is calculated by removing the capital costs of operating profit.
If a company has a minor benefit to their cost of capital, the analysis is very easy to simply working to losses, the basic concept that manages the Economic Value Added says that if he keeps working with no real profit is intended to bankruptcy.
The Economic Value Added concept these days has taken a large force because the management of the company is getting more complex, creating a huge need for all members of an organization are integrated and thoroughly familiar with the real needs of the company.