EVA and Free Cash Flow


 
Free Cash Flow > Forum Log in

EVA and Free Cash Flow
Kim, USA
What are the differences between EVA and free cash flow (FCF)? How to apply both of them?

 
 
No Differences
Salostey, Russia
npv = fcf / (1 + wacc) invested capital = eva / (1 + wacc)
or:
eva = nopat - invested capital x wacc
in long time period:
invested capital (ic) = amortization and depreciation (ad)
so:
nopat = fcf ad
so:
npv = eva / (1 + wacc) = [(fcf - ad) - ic x wacc] / ( 1 + wacc)
or:
npv = (fcf - ic - ic x wacc) / ( 1 + wacc) = [fcf - ic (1 + wacc)] / (1 + wacc) = fcf / (1 + wacc) ic
Thus, they are 2 different sides of the same coin.
 

   











 

    Do you wish to study further? You can learn more from the summary, forum, discussions, lessons, courses, training, instructions, expert tips, best practices and education sources. Register.  


Special Interest Group Leader

You here


More on Free Cash Flow
Summary
Forum
Best Practices

Expert Tips

Resources

About 12manage | Advertising | Link to us | Privacy | Terms of Service
Copyright 2017 12manage - The Executive Fast Track. V14.1 - Last updated: 20-1-2017. All names tm by their owners.