Economic value added V. Discounted cash flow: value-based management methods compared

The article analyses the respective advantages of Economic Value Added (EVA) and Net Present Value (NPV) for Company Value Management in terms of the Value Based Management (VBM). The author considers the methods of EVA identification and value appraisal comparison and relates EVA to NPV. The article also presents the results of the author’s empirical study of the relations between the market value of firm, return on investment and growth rate; suggests a list of pre-conditions for discounted cash flow and EVA yielding equal assessment results; presents the simulation data acquired through the imitation of the interconnection between growth rate, re-investment and return on capital being violated.