DETERMINATION OF THE ECONOMIC VALUE ADDED USING ECONOMETRIC MODELS WITHIN THE ECONOMIC ENTITY

(HARALAMBIE), Cristina Mihaela Ionescu and George Alin Haralambie
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(HARALAMBIE), Cristina Mihaela Ionescu: "Valahia" University of Targoviste, Doctoral School of Economic and Humanities, Targoviste, Dambovita, Romania
George Alin Haralambie: Faculty of Economic Sciences from Petroleum-Gas University of Ploiesti, Romania

Journal of Financial and Monetary Economics, 2023, vol. 11, issue 1, 212-220

Abstract: Determining the economic value added is a permanent concern among the actors participating in the market through the prism of efforts made to maximize shareholder wealth. The benefits brought by this modern management tool significantly contribute to the existing correlation between the objectives of the management and those of the shareholders, in order to perform a complex financial analysis of the performance with a high degree of responsibility. The study aims to evaluate the relationship between the dependent variable Economic Value Added (EVA) and a set of independent variables Net operating profit after tax (NOPAT), Earning per share (EPS), Return on equity (ROE) and Return on capital employed (ROCE).The time period considered for the analysis covers 6 financial years related to the period 2017-2022, the necessary data being extracted from the annual financial statements of ROMGAZ SA. As a result of the analysis performed, we could find that there is a strong correlation between Return on capital employed (ROCE) and Earning per-share (EPS) and between Return on equity and Net operating profit after tax (NOPAT). Regarding the existing correlation between Economic Value added (EVA) and Return on equity (ROE) we can see that it is a moderate measure. The results of the present study are in line with other research in this field, with the indicators used as a reference for determination of the value economic.

Keywords: Economic value added (EVA); Net operating after tax (NOPAT); Earning per share (EPS); Return on equity (ROE); Return on capital employed (ROCE) (search for similar items in EconPapers)
JEL-codes: G31 M21 M41 (search for similar items in EconPapers)
Date: 2023
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