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| Author: | Adsera, H. Vinolas, P. |
| Title: | FEVA: A Financial and Economic Approach to Valuation |
| Journal: | Financial Analysts' Journal
2003 : MAR-APR, VOL. 59:2, p. 80-87 |
| Index terms: | VALUATION FINANCE ECONOMIC ANALYSIS VALUE ADDED |
| Language: | eng |
| Abstract: | Financial analysts face a fundamental problem: When different valuation models are applied to the same company, they yield significantly results. The authors explain why, if properly applied, all traditional methods do yield the result, and also offer a new method that reconciles differences among the traditional methods. The "financial and economic value added" (FEVA) model divides corporate valuation into eight value drivers - three economic drivers taken from the economic value added approach and five financial structure drivers based on the MM approach - and differentiates the contribution of each driver. This model maintains the principle of one value because the FEVA formula is mathematically consistent with the standard methodologies. |
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