Impact of Weighted Average Cost of Capital and Profitability on Economic Value Added of Firms in the Industrial Sector

Alex Jeferson Huaman-Roque, Pedro Cuyate-Reque, Jimmy Cueva-Ruesta and Franklin Cordova-Buiza ()
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Alex Jeferson Huaman-Roque: Facultad de Ciencias Empresariales, Universidad Católica Santo Toribio de Mogrovejo, Chiclayo 14012, Peru
Pedro Cuyate-Reque: Facultad de Ciencias Empresariales, Universidad Católica Santo Toribio de Mogrovejo, Chiclayo 14012, Peru
Jimmy Cueva-Ruesta: Facultad de Ciencias Empresariales, Universidad Católica Santo Toribio de Mogrovejo, Chiclayo 14012, Peru
Franklin Cordova-Buiza: Research, Innovation and Sustainability Department, Universidad Privada del Norte, Lima 15083, Peru

JRFM, 2025, vol. 18, issue 11, 1-16

Abstract: In a context where the measurement of economic value is key for financial decision-making, Economic Value Added (EVA) stands out as a relevant indicator for assessing companies’ financial performance efficiency. This research aimed to determine the impact of the Weighted Average Cost of Capital (WACC) and profitability on the EVA of industrial sector companies in Peru. A quantitative approach was used, with a correlational-causal and non-experimental design. The sample included four industrial sector companies listed on the Lima Stock Exchange (BVL). The authors applied the document review technique, and the correlational analysis was carried out using linear regression. Results show that Return on Equity (ROE) is a statistically significant predictor of EVA across all companies analyzed, indicating a direct relationship. In contrast, WACC showed a weak relationship with the variables studied. It is concluded that profitability has a greater influence on EVA than WACC. However, the relationship between WACC, ROE, and EVA differs among companies. The model explains a moderate variability in EVA, suggesting that other factors not considered in the model also affect the generation of economic value.

Keywords: Economic Value Added; profitability; capital structure; investment; industrial sector (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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