The Economic Margin framework is a valuation system that explicitly addresses: profitability, competition, growth, and cost of capital. Unlike traditional valuation approaches that utilize perpetuity assumptions, the Economic Margin approach incorporates the principle that competition will decay away excess returns over time over a company's specific Competitive Advantage Period (CAP). EM = Operating Cash Flow - Capital Charge (return on and of capital) / Inflation Adjusted Invested Capital The Economic Margin incorporates differences in:
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