Company Valuation Through Free Cash Flow To Firm, Free Cash Flow To Equity and Economic Value Added Methods: An Application To Comparative From BIST Index

There are numerous ways to value a company. Analysts often use fundamental analysis methods. The most preffered method among all is called reduced cash flow. Reduced cash flow can be calculated in three different ways. These are; free cash flow to firm, free cash flow to equity and economic value added methods. In this study, company values of food, energy, technology and transportation sectors are tried to be identified by using FCFF, FCFE and EVA company valuation methods. The purpose of current study is to show which company valuation method reveals closer market price for which sector. In accordance with this purpose, company values between years of 2010 and 2014 off five companies from each industry is calculated. Company values for 2010, 2011, 2012, 2013 and 2014 were calculated using three valuation methods. Average value of each sector for five years was determined by using three methods. The values found by three methods were extracted from market price for each sector and it was concluded that the less the difference is the more reliable the method is. As a result, it is observed that EVA reveals closest market price in energy, technology and transportation industries, and FCFF is considered to be more applicable in food industry for calculating the market price.