D&A and CAPEX forecasting (game dev company)
So, I am recently working on a pitch about a game dev company (CD Projekt SA) and I came across some ambiguities while modelling the DCF. Looking at the Cash Flow Statement, I noticed that CAPEX is divided into Purchase of Fixed Assets and Purchase/Acquisition of Intangibles. Whereas D&A are on two separate lines.
I am not sure if I should just go for the CAPEX (Purchase of Fixed Assets) and therefore go with Depreciation (since it concerns tangible assets) or if I should also take Purchase/Acquisition of Intangibles and Amortization into account?
How would you guys approach this?
(I am familiar with the rule that CAPEX and D&A can be calculated as a % of the sale and while forecasting, CAPEX should be higher or equal to D&A.)
Look into the notes to see what sort of intangibles they are acquiring and if you expect that will be required in the future as well (to maintain growth or margins). Could be acquisitions of small games development companies for instance?
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