I want a complete valuation of the company, Electronic Arts (Nasdaq: EA), using the residual income/...

Question

I want a complete valuation of the company, Electronic Arts (Nasdaq: EA), using the residual income/ economic profit valuation method and not the DCF method. The valuation should also include detailed explanations of all assumptions made. I have attached the financial statements of the company.

Preeta · Accepted Answer

Economic profit method or the residual income method is a measure used to ascertain the value of a company. It uses the economic value added to get the profitability. As per this concept, profit actually occurs when something extra is created that is some wealth is created. A business cannot survive in the long run without creating value. 
The formula which is used to calculate economic value added is as follows:
EVA = NOPAT – (WACC * capital invested)  
Where,

I want a complete valuation of the company, Electronic Arts (Nasdaq: EA), using the residual income/ economic profit valuation method and not the DCF method. The valuation should also include detailed...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment