Projecting EBIT
Is there a standard way to project EBIT in a DCF? Is it always done as a % of revenue? Do you just take the historical % and use an average for the next 5 yrs?
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Well that’s one way to do it, but also depends on your POV of different cost items for the company, for ex, if the company did a huge capex spend (say a company trying to provide internet thru sat launches) and doesn expect to incur the same level of capex going forward, then historical % has no relevance or if it’s a software buyout where the sponsor expects to to trim R&D and S&M, again a different % will come out…so..
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