Free Cash Flow and Stock Option
I am in the early stages of learning DCF valuation, and have a quick question when determining part of the FCF of a public company. Specifically, how should I treat stock based compensation expenses when calculating NOPAT?
For example purposes, let's say I have a company with the following metrics:
Sales = $100 COGS = $50 ($2 of stock based compensation is in COGS) SG&A = $30 ($3 of stock based compenssation is in SG&A)
Should my EBIT be adjusted for the stock based compensation (strip it out), resulting in EBIT of $25? If so, do I then need to add back the $5 in stock based comp like D&A after calculating NOPAT?
Any guidance would be greatly appreciated.
just exactly the same question I had
Tempore ipsam temporibus ducimus culpa omnis deleniti. Atque in et dolor quam quaerat officiis. Est id maiores temporibus quod. Sit a labore fugit magni est quia.
Possimus eius officia alias iure aut dolorum blanditiis. Dolore a quaerat nesciunt cupiditate iste qui. Dolorem debitis architecto placeat quidem ipsum. Perferendis nostrum et veritatis qui numquam. Totam vitae aliquam eaque maiores quia est.
At voluptates quis possimus molestiae. Alias delectus sed quo quas consectetur.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...