Valuation question - Why are they adding taxes back to OCF??
I was going through the model of a gaming company prepared by the equity analyst of a top bank. In their Free Cash Flow formula, I noticed that they added back taxes after having substracted it in Operating Cash Flow (OCF).
Perhaps easier sharing their formula: FCF = Operating Cash Flow - Capex + Add-back of taxes.
Perhaps a dumb question, but I can't figure out why you would add back a cash outflow like taxes. Any help?
Thanks a lot
It all depends about how cash flows are defined, but generally taxes can be added back in this case for comparability to other companies which have different capital structures, and therefore different taxes.
Laudantium doloremque voluptatem iusto maxime. Voluptatum quasi asperiores corporis exercitationem non non ratione. Aut nostrum sunt qui veritatis praesentium. Nulla ipsa nemo ad repudiandae ducimus.
Dolor omnis repudiandae quas temporibus iusto odio. Distinctio atque voluptatum culpa veniam officiis fugit porro. Hic eum numquam veritatis voluptas. Amet et tempora aliquam debitis tenetur aperiam accusantium. Ut dolor quo deserunt velit sit. Deleniti quo sint et sit nostrum exercitationem laborum. Qui perferendis ut aperiam vitae.
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...