Forum Archive Index - July 2001

["Philip Robinson" <fire_appliance@hotmail.com>]

Hey you guys

I was sifting around the fool site and found a link to the McGill university Investment Club. File Name: Economic Model V16. It is an excellent 33 page pdf called "The Mechanics of the Economic Model, ROIC, WACC, EVA, MVA and CAP defined" It is really excellent and goes through the models and shows you how to calculate them, this is the bomb as far as fundamental analysis goes, and I would recommend all those keen on doing some dabbling in numbers at least get this and have a look at it. You will need an acrobat reader, but they are free from adobe. You will not regret it.

I had some trouble getting to the site though, tired on two different ISPs as well.

http://www.geocities.com/andrewychan/index.html

This gives you a feast of information.

Enjoy,

Phil

 

 

Introduction 2

The Mechanics of ROIC 3

- NOPAT 4

- Invested Capital 7

The Mechanics of WACC 11

The Mechanics of EVA & MVA 14

- EVA 14

- MVA 16

- Examples 17

Competitive Advantage Period 21

Summary 24

Myths 24

- Myth #1: Growth Is Good 24

- Myth #2: High Net Profit Margin Equals High Profitability 26

- Myth #3: ROE Is a Good Indicator of Performance 27

- Myth #4: What the Market Wants Is Profits 28

- Myth #5: The Market Is Short-Term Oriented 28

Shortcomings 30

Conclusion 31