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Misapplication of Economic Value Added Concept
Many companies have embraced the notion that the economic-value-added concept is superior to the traditional performance assessment measures based on traditional accounting.

Economic value added, known by the acronym EVA, is a financial measurement metric that considers the relationship between the enterprise’s profitability and the cost of the capital employed to achieve that profitability. The idea behind EVA is that managers should be evaluated in terms of how effectively, productively and profitably they employ capital in the business. To evaluate profit alone without considering the cost of the capital employed to achieve that profit can be very misleading. But if the relevant content and timing factors are not appropriately considered, EVA calculations can be as distorting and misleading as traditional profitability measures.

The value of marketing metrics is critical to a firm’s interests, especially knowing where the revenues originate, flow through the department and produce the ROI that the C-Suite is always asking of marketers large and small.

If you ever attended a Tony Robbins event where he spoke of raising your standards, this will be familiar. He taught us that we need to turn our “shoulds” into “musts.” Yes, you should begin saving more money for retirement.

But what you really should be thinking is: I must increase my savings for retirement! When you re-characterize something that you might do, something that you can do or something that you ought to do into an absolute must do, your thinking changes. This takes self-discipline. Your priorities change. It is a re-ordering of what is most significant to the top of your list from the bottom. Saving and investing for the future becomes an absolute must. If that becomes your governing principle, you likely will not spend $32 a week on expensive coffee.

Money has a mind of its own. It’s attracted to some folks and repelled by others. It looks at behaviors and decides who to like and who to hang out with. It seems fascinated by people who make intelligent decisions and not so interested in someone playing video games. And it seems to respect library time more than lottery strategies.

An excerpt from Parthiv Shah's upcoming book on Fiscal Fitness, available soon!

In 1992, I went to Bentley University for my MBA. I took Accounting I, Accounting II, Finance I, and Finance II. I learned a lot about finance but the one thing that we barely spent any time on was job costing. Most colleges only tell you that the sole purpose of accounting is to keep track of how much money you need to collect from people and how much money you have paid to those you owe. While that is important, there are other key ideas when it comes to tracking finances.

An excerpt from Parthiv Shah's upcoming book on Fiscal Fitness, available soon!

If you have engaged in a fiscally irresponsible behavior that put your business in a rough financial shape, DON’T BE TOO HARD ON YOURSELF. Yes, it is your fault. No one made you do it. A magical fairy does not give direct deposits nor does she take money away from you. So this is your fault. BUT, it can be fixed.

An excerpt from Parthiv Shah's upcoming book on Fiscal Fitness, available soon!

My first major business was a dot.com company. I built a system that was to be the foundation of a national network of dry cleaners. My partner and I created a data plan to tag every garment with an identification number; when garment #29305 was pressed eleventh time, the customer would get a coupon from the manufacturer to get the garment replaced. It was a good idea but unfortunately I did not know ANYTHING about dry cleaning.