EVA and MVA. Short Term Debt

Hi,

Is Short Term debt included or do we only look at Long Term Debt?

If i remember correctly, only long-term debt.

Hi Thammer,

The Market Value Added (MVA) = MV of Firm - Book value of Total Capital

And, MV of Firm = MV of debt + MV of equity

So the MV of debt includes all debt, including both Short term and Long term debt

Thank you both for your replies.

However you are saying the opposite, so I am still not sure if I should include short term D or not.

Anyone who are 100% sure on this one?

Ideally you should include short-term debt into EV or MV

and if someone can show me a cfai question explaining otherwise, I’ll eat a hat

I have learnt it to be only long term debt. Relevant practice questions that I have taken simply did not include any short term debt

For sure EV only include Long Term Debt, there is an example in the TT, but can’t remember which one, for MV never encounter any problems mentioned LT or ST, in calculating EV only mentioned Total Debt is different with MV of Debt which is given.

MV Added= MV of the firm -Accounting BV

EVA= NOPAT - $WACC ; $WACC = Total Capital x %WACC

it includes only Long term debt.

To this topic, is total capital = total assets (=equity +liabilities) = WCinv + FCinv = BV long term debt + BV equity?

Thanks for all the replies.

However they are quite mixed.

I will go with EV includes short term debt.

EVA and MVA is only long term debt.

Can anyone confirm?