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Economic Value Added
In accounting, as part of financial statements analysis, economic value added is an estimate of a firm's economic profit, or the value created in excess of the Required rate of return, required return of the types of companies, company's shareholders. EVA is the net profit less the capital charge ($) for raising the firm's capital. The idea is that value is created when the return on the firm's economic capital employed exceeds the cost of that capital. This amount can be determined by making adjustments to Generally accepted accounting principles, GAAP accounting. There are potentially over 160 adjustments but in practice, only several key ones are made, depending on the company and its industry. Calculation EVA is net operating profit after taxes (or NOPAT) less a capital charge, the latter being the product of the cost of capital and the economic capital. The basic formula is: : \begin \text & = ( \text - \text ) \cdot (\text - \text) \\[8pt] & = \text - \text \cdot (\text - \ ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Accounting
Accounting, also known as accountancy, is the process of recording and processing information about economic entity, economic entities, such as businesses and corporations. Accounting measures the results of an organization's economic activities and conveys this information to a variety of stakeholders, including investors, creditors, management, and Regulatory agency, regulators. Practitioners of accounting are known as accountants. The terms "accounting" and "financial reporting" are often used interchangeably. Accounting can be divided into several fields including financial accounting, management accounting, tax accounting and cost accounting. Financial accounting focuses on the reporting of an organization's financial information, including the preparation of financial statements, to the external users of the information, such as investors, regulators and suppliers. Management accounting focuses on the measurement, analysis and reporting of information for internal use by ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Market Value Added
Market value added (MVA) is the difference between the current market value of a firm and the capital contributed by investors. If MVA is positive, the firm has added value. If it is negative, the firm has destroyed value. The amount of value added needs to be greater so than the firm's investors could have achieved investing in the market portfolio, adjusted for the leverage (beta coefficient) of the firm relative to the market. Basic formula The formula for MVA is: : MVA = V - K where: * ''MVA'' is market value added * ''V'' is the market value of the firm, including the value of the firm's equity and debt * ''K'' is the capital invested in the firm MVA is the present value of a series of EVA values. MVA is economically equivalent to the traditional NPV measure of worth for evaluating an after-tax cash flow profile of a project if the cost of capital In economics and accounting, the cost of capital is the cost of a company's funds (both debt and equity), or from a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Fundamental Analysis
Fundamental analysis, in accounting and finance, is the analysis of a business's financial statements (usually to analyze the business's assets, Liability (financial accounting), liabilities, and earnings); health; Competition, competitors and Market (economics), markets. It also considers the overall state of the economy and factors including interest rates, production, earnings, employment, GDP, housing, manufacturing and management. There are two basic approaches that can be used: bottom up analysis and top down analysis. These terms are used to distinguish such analysis from other types of investment analysis, such as technical analysis. Fundamental analysis is performed on historical and present data, but with the goal of making financial forecasts. There are several possible objectives: * to conduct a company stock valuation and predict its probable price evolution; * to make a projection on its business performance; * to evaluate its management and make internal business d ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Aswath Damodaran
Aswath Damodaran (born 24 September 1957), is an Indian-American Professor of Finance at the Stern School of Business at New York University (Kerschner Family Chair in Finance Education). He is well known as the author of several widely used academic and practitioner texts on valuation, corporate finance and investment management; as well as a provider of comprehensive data for valuation purposes. Background Damodaran has been a professor at New York University's Stern School of Business, since 1986, focusing on corporate finance and equity valuation. He is on the faculty of the TRIUM Global Executive MBA Program, an alliance of NYU Stern, the London School of Economics and HEC School of Management. Other teaching includes the "Valuation" program for Stern Executive Education as well as the "Advanced Valuation" and "Corporate Finance" online certificates at NYU Stern. From 1984 to 1986 he was a visiting lecturer at the University of California, Berkeley. He was bo ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Joel Stern
Joel M. Stern († 21.05.2019) was chairman and chief executive officer of Stern Value Management, formerly Stern Stewart & Co, and the creator and developer of economic value added. He was a recognised authority on financial economics, corporate performance measurement, Business valuation, corporate valuation and incentive compensation and was a pioneer and leading advocate of the concept of shareholder value. He was also active in academia, and in the media. Personal life Limited information is available regarding Joel and his family’s personal lives, as well as his philanthropic endeavors. Family Karen B. Stern was previously married to Joel Stern. Their son, Erik D. Stern, a Brown and Chicago MBA Nobel laureate graduate, became an accomplished C-Suit advisor. Career After graduating from the University of Chicago's Booth School of Business#Academic concentrations, graduate program in Finance and Economics (Booth School of Business#Academics, MBA, Chicago-Booth, 1964), ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Apples And Oranges
A comparison of apples and oranges occurs when two items or groups of items are compared that cannot be practically compared, typically because of inherent or fundamental differences between the objects. The idiom, ''comparing apples and oranges'', refers to the differences between items which are popularly thought to be incomparable or incommensurable, such as apples and oranges. The idiom may also indicate that a false analogy has been made between two items, such as where an ''apple'' is faulted for not being a good ''orange''. Variants The idiom is not only used in English. In European French the idiom is (to compare apples and pears) or (to compare cabbages and carrots). The former is the same as the German In Latin American Spanish, it is (to compare potatoes and sweet potatoes) or, for all varieties of Spanish, (to compare pears and apples) or (to add pears and apples). In Peninsular Spanish, ''juntar churras con merinas'' (mix Churras with Merinos, two b ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Value Added
Value added is a term in economics for calculating the difference between market value of a product or service, and the sum value of its constituents. It is relatively expressed by the supply-demand curve for specific units of sale. Value added is distinguished from the accounting term added value which measures only the financial profits earned upon transformational processes for specific items of sale that are available on the market. In business, ''total value added'' is calculated by tabulating the ''unit value added'' (measured by summing unit profit — the difference between sale price and production cost, unit depreciation cost, and unit labor cost) per each unit sold. Thus, total value added is equivalent to revenue minus intermediate consumption. Value added is a higher portion of revenue for integrated companies (e.g. manufacturing companies) and a lower portion of revenue for less integrated companies (e.g. retail companies); total value added is very nearly ap ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Opportunity Cost
In microeconomic theory, the opportunity cost of a choice is the value of the best alternative forgone where, given limited resources, a choice needs to be made between several mutually exclusive alternatives. Assuming the best choice is made, it is the "cost" incurred by not enjoying the ''benefit'' that would have been had if the second best available choice had been taken instead. The '' New Oxford American Dictionary'' defines it as "the loss of potential gain from other alternatives when one alternative is chosen". As a representation of the relationship between scarcity and choice, the objective of opportunity cost is to ensure efficient use of scarce resources. It incorporates all associated costs of a decision, both explicit and implicit. Thus, opportunity costs are not restricted to monetary or financial costs: the real cost of output forgone, lost time, pleasure, or any other benefit that provides utility should also be considered an opportunity cost. Types Expl ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Enterprise Value
Enterprise value (EV), total enterprise value (TEV), or firm value (FV) is an economic measure reflecting the market value of a business (i.e. as distinct from market price). It is a sum of claims by all claimants: creditors (secured and unsecured) and shareholders (preferred and common). Enterprise value is one of the fundamental metrics used in business valuation, financial analysis, accounting, portfolio analysis, and risk analysis. Enterprise value is more comprehensive than market capitalization, which only reflects common equity. Importantly, EV reflects the opportunistic nature of business and may change substantially over time because of both external and internal conditions. Therefore, financial analysts often use a comfortable range of EV in their calculations. EV equation For detailed information on the valuation process see Valuation (finance). : Enterprise value = :: common equity at market value (this line item is also known as "market cap") :: + debt at mar ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Business Valuation
Business valuation is a process and a set of procedures used to estimate the economic value of an owner's interest in a business. Here various valuation techniques are used by financial market participants to determine the price they are willing to pay or receive to effect a sale of the business. In addition to estimating the selling price of a business, the same valuation tools are often used by business appraisers to resolve disputes related to estate and gift taxation, divorce litigation, allocate business purchase price among business assets, establish a formula for estimating the value of partners' ownership interest for buy-sell agreements, and many other business and legal purposes such as in shareholders deadlock, divorce litigation and estate contest. Specialized business valuation credentials include the Chartered Business Valuator (CBV) offered by the CBV Institute, ASA and CEIV from the American Society of Appraisers, and the Certified Valuation Analyst (CVA) by the ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Free Cash Flow
In financial accounting, free cash flow (FCF) or free cash flow to firm (FCFF) is the amount by which a business's operating cash flow exceeds its working capital needs and expenditures on fixed assets (known as capital expenditures). It is that portion of cash flow that can be extracted from a company and distributed to creditors and securities holders without causing issues in its operations. As such, it is an indicator of a company's financial flexibility and is of interest to holders of the company's Share capital, equity, debt, preferred stock and convertible security, convertible securities, as well as potential lenders and investors. Free cash flow can be calculated in various ways, depending on audience and available data. A common measure is to take the earnings before interest and taxes, add depreciation and amortization (business), amortization, and then subtract taxes, changes in working capital and capital expenditure. Depending on the audience, a number of refinement ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Market Value Added
Market value added (MVA) is the difference between the current market value of a firm and the capital contributed by investors. If MVA is positive, the firm has added value. If it is negative, the firm has destroyed value. The amount of value added needs to be greater so than the firm's investors could have achieved investing in the market portfolio, adjusted for the leverage (beta coefficient) of the firm relative to the market. Basic formula The formula for MVA is: : MVA = V - K where: * ''MVA'' is market value added * ''V'' is the market value of the firm, including the value of the firm's equity and debt * ''K'' is the capital invested in the firm MVA is the present value of a series of EVA values. MVA is economically equivalent to the traditional NPV measure of worth for evaluating an after-tax cash flow profile of a project if the cost of capital In economics and accounting, the cost of capital is the cost of a company's funds (both debt and equity), or from a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
