(ii) Briefly discuss THREE disadvantages of using EVA? in the measurement of financial per

Question

(ii) Briefly discuss THREE disadvantages of using EVA? in the measurement of financial performance.

(3 marks)

Answer 1

正确答案：
(ii) Disadvantages of an EVA approach to the measurement of financial performance include:
(i) The calculation of EVA may be complicated due to the number of adjustments required.
(ii) It is difficult to use EVA for inter-firm and inter-divisional comparisons because it is not a ratio measure.
(iii) Economic depreciation is difficult to estimate and conflicts with generally accepted accounting principles.
Note: Other relevant discussion would be acceptable.