Question Details

Compare and contrast the differing views an investor and management may have on financial statements. How should investors and management view EVA and FCF? Pick a publically traded company. Go to the company Web site. Try one that you are familiar with—you shop at their store, eat at their restaurants, or wear their clothes. On their Web site, try to find their annual financial report. If you cannot find it on their site, do an Internet search. Sometimes these are found under Investor Relations on a company's site. Yahoo finance is also a good source. If you still cannot find the annual report, try another search until you find one (for example, search for “GAP Annual Report”). Search for the economic profit, EVA, and free cash flow in the firm- annual report, and discuss your findings. Discuss the firm- operations as indicated by their annual report. You must submit your backup in Excel or other supporting documentation showing how answers were reached.

EVA=EBIT (1-T)- (Total investors capital x after-tax cost of capital)

Free Cash Flow = EBIT(1-T) + Depreciation - (Capital Expenditures+ Increase in Net Working Capital). Cite sources

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