Invested Capital is probably used in EVA calculation. I have probably seen somewhere that it is calculated by =BV of Equity+BV of LTD But logically I would think that STD should also be added. Please clear up this confusion. Thanks.
It will include short term debt too.
By definition, EVA = NOPAT -$WACC = EBIT(1-t) - WACC x Capital So if STD is part of your invested capital, it should be part of EVA calculation.
EVA = EP = NOPLAT - $WACC where WACC is invested Capital (FA + NWC or Long term debts + SH Equity)
IC is either net ppe + net wc or BV Debt + BV (or MV) of Equity
Eazy E Wrote: ------------------------------------------------------- > EVA = EP = NOPLAT - $WACC where WACC is invested > Capital (FA + NWC or Long term debts + SH Equity) This is the exact problem. In Schweser they mentioned using Long Term Debt but not Short Term. I tried to find the correct definition from the CFAI but could not find it.