Economic value added (EVA) as an indicator for financial decisions: An Application to the Province of Santa Elena, Ecuador

Resumen

This paper analyses the need to use alternative methods to the traditional accepted techniques applied\nin investment analysis for associative groups. This paper exposes that the technique economic value\nadded (EVA) can contribute to measure other aspects involved in financial decisions for associative\ngroups omitted in traditional indicators of project evaluation, net present value (NPV) and internal rate\nof return (IRR) such as i) evaluation of the productive activity of the associated strategies popular and\nsolidarity economy ii) quantifying the profitability generated by the implementation of the project, iii)\nidentifying the main impacts generated by implementing the creation of the company and iv) the\nidentification of the economic value added. This tool permits the employment of probabilistic\nscenarios, in order to simulate changes in the input parameters for determining when the EVA tends to\nzero, making a comparative analysis with the NPV. It is used to calculate the weighted average cost of\ncapital (WACC) market financial returns because you cannot get or inefficient conduct the study by\nestimating the beta for the CAPM method because Ecuador has not data from the stock exchange. We\nexecute an application of this method a processing plant for the production of salt in Jose Luis Tamayo,\nsituated in the Province of Santa Elena, Ecuador.