What if D&A increases, how the DCF result can be affected?
The question is as the title. I came up with my answer, but I'm not sure, so I hope you guys check if my answer is right. My answer is as below. "IF D&A increases, the effective tax rate can decrease. Because although D&A is not an expense with an outflow of cash, that is an expense recorded on the income statement affecting pre-tax income referred to determine the effective tax rate. So if D&A increases, the tax rate can go down due to decreased Pretax income, and then the overall FCFF can go up. So EV will go up a little bit.
But if there is a change in CAPEX that causes the increase of D&A, then we should take account of the CAPEX, which has a big impact on FCFF in the year, decreasing it. So, if CAPEX has been taken account of, EV will go down."
I appreciate all of your opinions and feedback.
Corporis reprehenderit non ut illo et. Mollitia laborum et aut quis ipsum. Fugiat et fugit maiores aut. Eligendi dolore a asperiores rem cum perferendis fugiat.
Quia corrupti iure aut voluptatibus aut. Veniam natus et sapiente dolor non. Nesciunt ut amet harum veniam est.
Animi magni officia ut et sed. Eum atque ea sit iure iusto ea explicabo. Sit at praesentium voluptatibus fugit ad culpa.
Et vitae dolore omnis sint dolorem. Earum quibusdam molestias doloremque id eum aut dolores maxime. Atque dolores est temporibus odio ipsa.
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...