Technical Question Help
The question is "How do you get from Net Income to UFCF?"
I know one solution is to add back interest expense and taxes to get back to EBIT. Multiply that by (1-tax rate). Then add back D&A, subtract CapEx, and subtract change in NWC.
But, before I saw that answer I did it a different way and want to know if it is incorrect. Can you just add back interest expense, but not taxes and essentially get EBI (earnings before interest expense). Then add back D&A, subtract CapEx, and subtract change in NWC. Taxes have already been accounted for. Is this incorrect?
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