Complete EVA & DCF Model (Economic Value Added & Discounted Cash Flow)
Originally published: 05/06/2019 15:29
Last version published: 28/09/2020 08:30
Publication number: ELQ-69456-29
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Complete EVA & DCF Model (Economic Value Added & Discounted Cash Flow)

Comprehensive model for valuation and company performance (DCF & EVA combined)

This unique model is a combined Economic Value Added (EVA) and Discounted Cash Flow (DCF) model that is different from any other, containing a new and different technique. It focuses on company performance in detail to help businesses to understand the know-how behind creating value. The model goes directly to company performance in an easy, understandable way with full transparency, so companies know where each dollar is coming from and where it will be spent in the business.

The model contains 2 main parts: Discount Cash Flow model (DCF) and Economic Value-Added model (EVA). Together they give the most accurate company value.

The Economic Value Added (EVA) is preferable because it shows how much value has been and will be created (or destroyed) by the allocation and management of capital. The advantage of the economic profit model (EVA) over the DCF model is that the economic profit model is a useful measure for understanding company performance in any single year, while free cash flow model is not. Combining the two models allows companies to see the inner working of a company’s performance for each year step by step (opening the black box of the company) or to get a snapshot of performance each year. I use the expression “opening the black box” because it’s true and is something you won’t have seen before in any valuation model.

This model has been handmade and perfected. If you put your data in the Balance Sheet and Income Statement, the model works automatically without the user needing to make any amendments. This will give you the correct value of the business. You will get equal values of the company from both models (enterprise’s strategic value) - you can see from the screenshots that net income in ROIC analysis will be the same as net income from Income Statement, as the featured model proves at the bottom line i.e. net income. (If you have the same items in the Balance Sheet & Income Statement, then you may need to make amendments to get the correct balance - there are additional samples included with the download to help explain this: (a) Base Case PPT and (b) 2 sample models with different items).

*See the screenshots of 2015 Summary tab for the heart of the model where DCF & EVA corporate values are compared*

This excel sheet contains complex financial modeling and is intended for professionals. The download includes a 107-slide PowerPoint with sample excel models and information that explains how the model and the new technique works.

This Best Practice includes
1 EVA & DCF combined model excel sheet, 1 accompanying PPT presentation, 2 sample models

Acquire business license for $500.00

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  • Yasmin Habib(last updated: 14/06/2019 07:33)


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