EVA and Free Cash Flow
What are the differences between EVA and free cash flow (FCF)? How to apply both of them?
X
Welcome to the Free Cash Flow forum. The topic being discussed here is: "EVA and Free Cash Flow".
Sign up now to gain access. It's easy and 100% free.
Log in
| |
|
Comments
|
| |
|
|
0 |
|
Salostey, Russia
|
|
No Differences
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.
|
|
|
|
|
Log in
Translate
