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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era

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To: porcupine --''''> who wrote ()3/31/1998 9:22:00 PM
From: kezer  Read Replies (1) of 1722
 
porcupine:

i enjoy your posts and, personally, find the process of applying G&D concepts in todays markets to be an informative process.
i am intrigued by the analytical process known as Economic Value Added (EVA) which many companies ( GE, KO, CPB, etc) use in their internal planning and capital budgeting process. are you familiar with this methodology and are you aware of Buffett ever referencing it in any of his orations.
in its most simple form, EVA attempts to remove accounting distortions and measure cash return on cash invested including a charge for use of capital (both equity and debt). EVA removes items such as amortization of goodwill and does not use full expensing of R&D in determining cash earnings.
i have found this method to be a very sound way of comparing the results (backward looking ) of mature companies in industries with fairly stable demand.
your thoughts would be appreciated
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