DCF/EBIT

Hey guys,

I was wondering if someone could please clarify something for me.

When doing a DCF analysis, we are using EBIT (operating income) as a starting point.

However, EBIT is also technically Net Income + Interest + Taxes.

But, if you are using operating income as EBIT, the other income and expenses line won’t be captured vs if you start from the Net Income it will.

Asking the question since I know that most none-cash expenses are added back post EBIT (1-T) so if you are starting from Net Income, and your other expenses/income line is all none-cash, you will not get to the same end result as if you were starting directly from the operating income line.

Are the none-cash expenses added post EBIT (1-T) only the ones that are above the operating income line and everything under it should be added back to net income if you are using it as your starting point?

Might sound stupid but I would like for someone to clarify this for me as I am a bit confused

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