Value creation is becoming increasing more and more important as businesses come to understand Economic Value Added (EVA).  Companies who have experienced and used EVA, understand the basic criterion for management decision-making and as a parameter for "measuring" company results and their management teams.

Company experience shows that radically and positively changed results have been obtained when EVA has been adopted and applied correctly by each business unit.  It is therefore necessary for every manager within the company who has responsibility for a business unit to understand value creation and how to insure core concepts of company economics are applied.

We must not forget, senior management teams have a fiduciary responsibility to their shareholders to maximize the current market value of the company.  By doing so, the company, shareholders, and employees benefit greatly.  As companies learn and apply EVA, in turn the overall quality and improvement in the standard of living for all will increase.  It is therefore important for management to choose project that yield a positive ROI.  The more effective the management team is in the use of resources and there deployment, the more economic grow will be realized for all concerned.

It should be the focus of senior managers to focus on EVA, which by definition is operating profits less the cost of all of the capital employed to produce earnings.  If managers can learn to increase operating profits without tying up capital and thereby invest in only projects that will earn more than the cost of capital for those projects, then net present value of investments will increase.