 with reference to investment decency in order to ensure wealth maximization for the corporate owners. We know that the financial models and other investment theories in finance theory are characterized by rational human behavior in the presence of a world which is hypothetically known as efficient capital market. And in this scenario, the uncertainties are reduced to measurable probabilities. All these steps are meant to ensure the creation and sustaining of wealth maximization for the firm owners. So far as the shareholders' wealth or value addition is concerned, in fact, management still have no precise definition of what is meant by wealth maximization for the shareholders. Is it a dividend or is it future earnings or is it the combination of these two items that are incorporated in order to attain capital gains in the market? Now, there are fundamental problems that whether a firm's dividend decency rather than a reinvestment plan for the firm's growth has any differential impact on its share prices in the stock market. There also exist two other problems in this regard that the management perception on earning measurement may differ not only because of variation in the accounting methods but also due to the management's greed instead of working for the shareholders' welfare. The second question arises that the asymmetric information, rumor, speculation and crowd behavior may turn market into inefficiency and instability which may lead towards the crash in the market. Now, if without internal cash flow information available to the external investors, whether these investors are able to reformulate external accounting data to measure the consequences of managerial decency, now whether it is possible, this question arises. And the other question arises that if it is possible to manipulate the external accounting data to determine the consequences of the managerial decency, then capital market may have some control over the manager behavior that conflicts with the creation of wealth maximization. So these are the two fundamental questions. Economic value edit, perfect capital markets encourage wealth maximization in the form of cash inflows to the firm at much cheaper cost of creating them and which are expected as a result of optimum management, optimum investment finance decisions. We know that the firm's objective can be classified, categorized as a single line item which is a wealth maximization for the shareholders. Now this wealth maximization of shareholders can be viewed from the perspective of finance theory and from the perspective of the economic theory. Finance theory means that the wealth maximization can be termed as net present value maximization, means that the welfare or wealth of the shareholder can be maximized if the net present value of all of the projects undertaken by a firm is maximized. But economic theory translates this wealth maximization into value addition. So far as EVA or economic value edit is concerned, it is the access of distributable profits over the overall cost of capital of the firm. By distributable profit remains the deleveraged earnings. This means that to determine distributable profit, we have to add back interest expense to the after-tax profits. This means that EVA is equal to earning after-tax plus interest expense which is then known as distributable profit. From this distributable profit, we deduct the overall cost of capital. In other words, we distributable profit may be termed as no-pad, means net operating profit after-tax and this no-pad can also be termed as net operating income. To determine cash cost of capital, we multiply opportunity cost with the capital of the firm. If distributable profits are greater than the cost of capital, this means there is positive EVA and by positive EVA, we mean that wealth has been created for the shareholder which is termed as value creation. But on the other hand, if distributable profits of the firm are lesser than its cost of capital, then there is negative EVA and by negative EVA, we mean that the value or wealth of the shareholders has been deleted or destroyed. We have another measure that is market value added. In fact, market value added is an external measure that reflects the effect of EVA on the share prices of the firm in a stock market. To determine market value added, we need to deduct the capital of a firm from its market value of equity and market value of debt. This means that we need to determine market value of the overall firm and from this market value of the whole firm, we deduct capital of the firm, the resulting figure is known as market value added. Market value added has a significant relation with the economic value added. And if EVA is positive, then this means that market value added will be positive and this will lead towards the wealth creation for the shareholders. On the other hand, if EVA is negative, then we may have negative MVA. This means that the value or wealth of the shareholders may have been destroyed or deleted. While determining wealth maximization or value addition for the shareholders, we have to account for two other things that profit and cash flows. For profit and cash flows, we have NPV. We know that NPV is a cash flow driven matrix. We add back certain non-cash items to the accounting income and we arrive at NPV of the project or of an investment proposal. But to determine EVA or economic value added, we need to adjust certain accounting based adjustments to the accounting earnings along with the interest expense. So we can say that the relationship between income and cash flow can be developed if we adjust our income with some accounting adjustments, then we come to the figure of cash flows. EVA is a periodic concept. This periodic concept can be determined in the form of increase and decrease in the economic profits of the firm. But so far as the market value added is concerned, it is a residual phenomenon. This means that it is the cumulative of past EVAs that has been accumulated in the form of wealth. So it is a residual phenomenon. To check the relationship between EVA, NPV and market value added, we have a little example here. We have V for value at present, which is 200 million. We have NOPAD for the current period, which is 20 million. We have capital right now, which is 100 million. We have cost of capital, which is 10 percent. We have opening market value added or opening MVA, which is 90 million. Now to determine EVA, we know that we have to deduct overall cost of capital from the NOPAD. Now we have NOPAD of 20 million. And to determine cost of capital, we multiply 10 percent to the capital, which is 100 percent. The resulting figure is 10. And we deduct this 10 as interest expense or the cost of capital from 20, which is NOPAD. We have an EVA of 10 million. To determine market value added, we need to deduct capital from the current market value of the firm. And we have current value of 200 million pound and current capital of 100 million. The difference, we have 100 million. So we have till now EVA of 10 million and MVA of 100 million. We can also describe change in market value added as the difference between current period market value added and the previous periods market value added. If we see that we have it present, market value of 100 million, which is market value added at the right now time zero. And earlier as an opening balance, we have market value added of 90 million dollar. When we see the difference, the difference comes to 10 million dollars. Now comparing the two market value added, we can see that the change in market value added is basically due to the current periods EVA. So we can prove that current period EVA is the residual market value added which resides and accumulates over a period of time and that period is the current period.