Study of Information content Economic Value Added in Explain new models based on Free Cash Flow (CVFCFF and CVFCFE)

Meysam Kaviani

Abstract


 

Free Cash Flow (FCF) is one of the measures based on cash flow for measuring performance of firms, among various evaluation measure of performance; that indicates the cash of firm after doing necessary expenditures for keeping and developing properties. Due to that, various models based on FCF have been explained for evaluation of firms in which free cash flow to firm (FCFF) and Free Cash Flow to Equity (FCFE) can be considered as the important ones.

This paper aims to give new models of Free Cash Flow. These models are called Created Value from Free Cash Flow to Firm (CVFCFF) and Created Value from Free Cash Flow to Equity (CVFCFE) that purpose of examined the content of information Economic value Added (EVA) of Iran Companies in explain of CVFCFF and  CVFCFE. For this purpose a sample of 10 companies representing in the automotive of industry for a period of five years from 2005-2009 have been analyzed.

The Research results indicate that there is significant relationship and positive between CVFCFF and CVFCFE with Economic value Added.


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DOI: http://dx.doi.org/10.5296/ijafr.v3i1.3767

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