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EVA and DCF-valuation
•EVA-valuation
has thus theoretically nothing new, but…
–It is very illustrative, especially with traditional
companies with slow
growth
–Easy to calculate straight from the
EBIT, even one individual year describes often the situation well unlike cash-flow in individual year
–At its best as it forces to take the
invested capital into account. Especially the sell-side analyst tend to focus on income
statement and not on
balance sheet. And as you calculate the value of the company without required attention to
capital requirements in the long run, you normally overestimate the value of the company…