Ivey Publishing

Product Details

TTK Prestige: Economic Value Added Analysis
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8 pages (5 pages of text)
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Case (Field)
In 2014, an analyst with a leading investment company wanted to evaluate the financial performance of a kitchen appliances company, TTK Prestige Ltd., headquartered in Bangalore, India. To accomplish this task, the analyst decided to use the economic value added (EVA)-based performance measure, which accorded importance to value creation by management for its shareholders. Recently, there had been a shift away from traditional approaches of measuring shareholder value creation (e.g., earning capitalization and present value of estimated cash flow) towards more value-added approaches like EVA, which offered a more effective method for evaluating financial performance.
Learning Objective:
This case can be used in a corporate finance course in an undergraduate or MBA program. It lends itself to a discussion of EVA methodology (including estimation of weighted average cost of capital) and its relevance. It would be particularly relevant after students have studied capital structure in a finance course. The case allows students to achieve the following objectives:
  • Understand the concept and relevance of the EVA approach
  • Understand the theory underlying the weighted average cost of capital and its use in the EVA approach
  • Understand the nature and computation of the cost of equity including beta estimation
  • Understand the concept of net operating profit after tax and its computation
  • Understand the estimation of weighted average cost of capital and EVA for the target company
International,  Finance
Other Services
India, 2014
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