EPVBruce Greenwald (Columbia University)#ValueInvesting#NoGrowth#EarningsPower#ColumbiaValue

EPV (Earnings Power Value) Calculator

Developed by Columbia Business School Professor Bruce Greenwald, EPV strips away all speculative growth assumptions (growth = 0%) to value a firm purely on its sustainable operating earnings power capitalized at the cost of capital.

Calculator Inputs

Normalized EBIT($M)

Income Statement > Operating Income

Effective Tax Rate(%)

Depreciation & Amortization($M)

Cash Flow Statement > D&A

Maintenance CapEx($M)

Cost of Capital (WACC)(%)

Cash & Non-Operating Assets($M)

Total Debt($M)

Diluted Shares(M Shares)

Current Market Price (Optional)(USD)

Find inputs with free data (Finviz)

Find the values below on the Finviz quote page and enter them in the calculator.

Open Finviz quote page

Calculator input	Where on Finviz
Normalized EBIT	Income Statement > Operating Income
Effective tax rate	Income Taxes ÷ Net Income Before Taxes
D&A	Cash Flow > Depreciation
Maintenance CapEx	Cash Flow > Capital Expenditures (absolute)
Non-op cash/investments	Cash & STI + Total Investments
Total debt	ST Debt + LT Debt
Shares outstanding	Income Statement > Shares Outstanding

Income Statement tab — ① Operating Income ② Net Income Before Taxes ③ Income Taxes ④ Shares Outstanding

Cash Flow tab — ⑤ Depreciation ⑥ Capital Expenditures

Balance Sheet tab — ⑦ Cash & ST Investments ⑧ Total Investments and Advances ⑨ ST Debt ⑩ LT Debt

Financial statement figures are under the Income Statement / Balance Sheet / Cash Flow tabs above the snapshot table; set Timeframe to Annual. Click an image to enlarge.

Theoretical Foundation & Equation

EPV normalizes operating earnings (EBIT), deducts taxes and maintenance CapEx, and capitalizes this sustainable NOPAT at the cost of capital (WACC). Cash is added and debt is deducted to isolate equity value.

Core Intrinsic Formula

Enterprise EPV = Sustainable Adjusted NOPAT / Cost of Capital (k) | Equity EPV = Enterprise EPV + Cash - Debt

Variable Definitions & Disclosure Guidance

Symbol	Variable Name	Description	Filing Source Guide
Normalized EBIT	Normalized EBIT	Sustainable operating earnings stripped of non-recurring items	10-K Income Statement: Normalized Operating Income
Tax Rate	Effective Tax Rate	Normalized corporate tax rate (20-25%)	Historical average effective tax rate
Maintenance CapEx	Maintenance CapEx	Capital expenditures required strictly to maintain existing capacity (excluding growth CapEx)	Cash Flow Statement: Estimated replacement CapEx
k	Cost of Capital	Required hurdle rate or WACC (8-10%)	Weighted Average Cost of Capital

Financial Intuition: Growth is uncertain and frequently destroys economic value when ROIIC < WACC. If a business is attractive with zero growth, any future profitable expansion is a free option for the investor.

Step-by-Step Worked Example

Columbia Benchmark Manufacturing

Greenwald no-growth benchmark valuation case.

Sample Financial Filing Inputs

Normalized EBIT

$100M

Normalized Operating Profit

Tax Rate / WACC

25.0% / 10.0%

Tax Rate and Capital Cost

Cash / Total Debt

$30M / $50M

Balance Sheet Assets & Debt

Diluted Shares

10M Shares

Share Count

Calculation Steps

Step 1: Calculate Sustainable NOPAT$75.0M Sustainable Earnings

$100M × (1 - 0.25) + ($20M - $20M) = $75.0M

Step 2: Compute Enterprise EPV$750.0M Enterprise Value

$75.0M / 0.10 = $750.0M

Step 3: Bridge to Equity Value and Per Share Value$73.00 per share

($750M + $30M - $50M) / 10M shares = $730M / 10M = $73.00

Example Conclusion & Interpretation

Under strict zero-growth assumptions, intrinsic Earnings Power Value is $73.00 per share.

Suitability Checklist & Limitations

Best Suited For

•Mature cash cow businesses with protected competitive moats
•Value investors refusing to pay for speculative future growth

Not Suitable For

•Unprofitable startups and rapid-growth software firms yet to turn a profit
•Secularly declining legacy businesses losing operating profit to technological disruption

Frequently Asked Questions

DCF relies on multi-year growth forecasts and terminal growth assumptions, whereas EPV assumes 0% perpetual growth, creating a much harder intrinsic value floor.

Primary Citations & Source Documentation

Bruce Greenwald et al. (Columbia Business School) (2001)

Value Investing: From Graham to Buffett and Beyond (Wiley Finance, 2001)

View Source / Filing Reference

Legal Caveat

Ensure that maintenance CapEx accurately reflects true replacement depreciation costs.