What is the 'Economic Value Of Equity  EVE'
A cash flow calculation that takes the present value of all asset cash flows and subtracts the present value of all liability cash flows. This calculation is used by banks for asset/liability management.
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BREAKING DOWN 'Economic Value Of Equity  EVE'
The value of a bank's assets and liabilities are directly linked to interest rates. By calculating its EVE, a bank is able to construct models that show the effect of different interest rate changes on its total capital. This risk analysis is a key tool that allows banks to prepare against constantly changing interest rates.
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RELATED FAQS

How do you use a financial calculator to determine present value?
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Why do analysts look at operating cash flow?
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How do I calculate free, discounted and operational cash flow in Excel?
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What is the formula for calculating free cash flow?
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What's the difference between free cash flow and operating cash flow?
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What is the difference between cash flow and free cash flow?
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