EVA is a measure of a company's ability to generate returns that exceed its cost of capital, providing insight into its true economic profitability. By considering both operating performance and the cost of financing, EVA goes beyond traditional accounting metrics like net income to assess how effectively a company is utilizing its capital. A positive EVA indicates that a company is creating value for its shareholders, while a negative EVA suggests that the company is not earning enough to cover its capital costs, potentially leading to value destruction.