“EVA Momentum is a registered trademark of EVA Dimensions. In 2009 EVA Momentum emerged as the newest EVA-related business performance measure”(Mahoney, 2011). Stewart stated that EVA Momentum is “the one ratio that tells the whole story”. Colvin stated in Fortune that “savvy investors and managers will focus on EVA Momentum”. “EVA Momentum has not been empirically investigated in any known previous study” advanced earlier EVA work by introducing EVA Momentum as a new measurement tool. Stewart described EVA Momentum as the increase or decrease in economic profit divided by prior period sales. Stewart described EVA Momentum as an economic measure that is the size and situation neutral, provides trend warnings, and is —market-calibrated. In contrast to Kaplan and Norton, who stated no single measure is adequate to measure business performance; Stewart argued EVA Momentum is the single best performance measurement tool. EVA Momentum attempts to address the weaknesses in sales growth rate, EPS, market share, profit margin, return on capital, and other measures. EVA Momentum considers year-over-year changes in economic profit as measured by EVA, relative to prior year sales. This methodology allows for measurement of the change in a firm’s economic performance relative to the firm’s baseline sales. Stewart claimed that stating EVA Momentum as a percentage of sales facilitates performance comparisons across company size and industries.
In accounting performance evaluation model, the value of a company functions as various parameters such as net profit (NP), earning per share (EPS), profit growth (PG), return on equity (ROE), return on investment (ROI), free cash flow (FCF), and dividend (D). In this study return on equity (ROE) and return on assets (ROA) selected as accounting performance measures.
According to Chandra Shil “Among all traditional measures, return on capital is very common and relatively good performance measure. Different companies calculate this return with different formulas and call it also with different names like return on investment (ROI), return on invested capital (ROIC), return on capital employed (ROCE), return on net assets (RONA), return on equity (ROE) etc.”.
Based on the wet and tight ROE, along with return on assets (ROA), is one of the all-time favorites and perhaps most widely used overall measure of corporate financial performance.
This was confirmed by Monteiro (2006:3) who stated that ROE is perhaps the most important ratio an investor should consider. The fact that ROE represents the end result of structured financial ratio analysis, also called Du Pont analysis contributes towards its popularity among analysts, financial managers and shareholders alike.
The return on equity (ROE) is calculated by dividing net profit (NP) on total equity. This ratio is calculated the profit of the company in charge for a $ of capital equity. In the result, the disadvantages are that the net profit (NP), is also entered on this criterion. ROE is the amount of net profit return as a percentage of stockholders’ equity. ROE assesses a corporation’s profitability. It’s showing how much profit a firm generates the money stockholders have invested.” Stockholders invest to get a return on their money, and this ratio tells how well they are doing in an accounting sense”.