This category represents the basic measurements essential to understand the health of any enterprise regardless of its strategy. Some of the measures were discussed earlier in the book, but will be included again as a reference point. The only way these metrics will be helpful is to track them and analyze the trends. They should also be benchmarked against competitors and industry trends. The profit-focused accounting trend format provides for projecting the best estimate of full-year results so that expected results can be compared against the original plan and last year. This approach gives greater meaning to interim data that traditional formats fail to provide.

Economic Value Added (EVA ) It is a measure of financial performance that combines the concept of residual income with corporate finance, which says that capital has a cost and that earning more than the cost of capital creates value for shareholders. EVA is computed by taking the difference between the return on net assets employed (NOPAT/capital) after the necessary adjustment (see Chapter 12) and the cost of capital. Another view is (RONA less the cost of capital) times capital employed. For greater detail and explanation, refer to Chapter 12 and the appropriate templates (available for download at www.jrosspub.com).

Return on Net Assets (RONA) This is the ratio of net income (EVA less NOPAT) divided by net assets. Net assets are equal to total assets less total liabilities or the equivalent of shareholders equity.

Return on Assets (ROA)