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DCF Valuation: FCF and EVA Models. James L. Grant, Ph.D. JLG Research [email protected] FCF and EVA Valuation. Free Cash Flow Formula Generating Cash Flow Estimates Valuation of Cash Flows Cost of Capital Variation EVA Valuation. EVA Valuation Model. Economic Profit Formula

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DCF Valuation: FCF and EVA Models

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Dcf valuation fcf and eva models

DCF Valuation:

FCF and EVA Models

James L. Grant, Ph.D.

JLG Research

[email protected]


Fcf and eva valuation

FCF and EVA Valuation

Free Cash Flow Formula

Generating Cash Flow Estimates

Valuation of Cash Flows

Cost of Capital Variation

EVA Valuation


Dcf valuation fcf and eva models

EVA Valuation Model

Economic Profit Formula

Forecasting Economic Profit

NPV Valuation of EP

Cost of Capital Variation

Standard Accounting Adjustments


Standard eva accounting adjustments

Standard EVA Accounting Adjustments

  • Operating leases

  • LIFO Reserve

  • Research and Development

  • Goodwill Amortization

  • Special items (restructuring costs)

  • (typically cited in CFA program)


Jlg research disclosed versus basic eva dow jones industrials

JLG Research Disclosed versus Basic EVADow Jones Industrials


Illustration of multiple regression analysis

Illustration of Multiple Regression Analysis

Top 50 US Wealth Creators

(And Destroyers)


Dcf valuation fcf and eva models

NPV/Cap=a + b times EVA/Cap

Decileb (slope)R-Squared

118.57 67.37%

511.72 39.74%

62.99 10.57%

100.46 7.47%

Source: J. Grant, Foundations of Economic Value Added


Thank you

Thank you!


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