Economic Value Creation
The condition under which a business earns above its cost of capital -- ROIC greater than WACC, or equivalently NOPAT greater than the capital charge (WACC times invested capital). Sustained economic value creation is what drives long-run shareholder wealth; sustained value destruction shrinks intrinsic value per share even when accounting earnings grow. The phrase is the practitioner shorthand for the durable, per-dollar economics of a business -- independent of one-time gains, accounting choices, or capital-structure financial engineering.
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Related terms
Ambiguity Aversion · Anchored Assumption · Asset Beta · Bank ROE Spread · Banker Pitch Deck · Beta
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