Question

Explain the similarities between Economic Value Added and Residual Income.

Answer 1

Their are different ways to evaluate the performance of the organisation

1) residual income

2) economic value added

3) return on investment

Some of the similarityes of economic value added and residual income are

The economic value added and residual income both measures are performance measurement of companies which will focus on wealth creation

Another similarity is the economic value added and residual income are measures for the residual income of the company

It would increase when the measures are positive

Throughout introductive literature of a firm both measures are treated to be same

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