Published Paper Details:

There are two key objectives of the financial management namely profit maximisation and wealth maximisation. This discipline follows the concept of managing finance using two approaches viz., traditional approach and modern approach. In traditional approach, financial managers have mainly prioritized profit maximisation as its primary objective. The modern approach requires mangers to focus on wealth maximisation by adopting various tools of value creation and value enhancement. At times these two objectives conflict as in the process of maximising profits, managers inadvertently destroy the wealth. If a firm has to survive in the long run, it has to build a roadmap for sustainable growth. This can be achieved by adoption of one of the superior measure of wealth creation and performance viz. Economic Value Added (EVA). EVA is the trade mark developed by Stern Stewart in early 1990. EVA stands superior to other measures on the ground it considers the cost of equity which was ignored by traditional tools; thus not reflecting the true value. EVA is a metric to assess whether a company has produced any value for their shareholders. Market Value Added (MVA) on the other hand is a wealth metric which enables the stakeholders to analyse the degree of wealth created or destroyed by the business. This paper makes an attempt to measure the value /wealth creation with the help of EVA and MVA, of software companies, which were part of NIFTY for all the last seven years ending 31st March 2017.