How is minority interest factored into a DCF?

If a company has stakes in subsidiaries that they don't fully own, that is usually reflected when you subtract minority interests from Net Income to get Net Income After Minorities. Every line item before that (revenues, costs) are

Now when calculating the FCFF, I usually start with EBIAT (Earnings Before Interest After Taxes) then add/subtract D&A, change in WC, and CAPEX. This means I'm not factoring in the minorities interests in the DCF calculation right? Because EBIAT includes revenues/costs attributable both to the company AND to minorities.

Am I not supposed to be factoring that in? Is it as simple as subtracting the book value of minority interests from the Enterprise Value to arrive at Equity Value?

 

Hey charlie the unicorn, I'm here to break the silence...any of these links help you?:

  • Free Cash Flow to Firm vs. Free Cash Flow to Equity Growth Rates someon explain why? What is Free Cash Flow? Free cash flow is a measure of how much money is available to ... value. Levered free cash flow is calculated as Net Income (which already captures interest expense) ... How to discount levered and
  • Levered vs. Unlevered Free Cash Flow Difference for DCF 's and when are you supposed to use levered FCFs? What is Free Cash Flow? Free cash flow ... get paid last in the event of bankruptcy. How to discount levered and unlevered free cash flow? When ... is a measure of how much money is available to i
  • EBITDA vs. Operating Cash Flow vs. Free Cash Flow "hotseat" during the technical part of the interview". Distinctions between EBITDA, Operating Cash Flow ... and Free Cash Flow Noticed EBITDA has been a common source of confusion. I hope this helps anyone with ... stock based compensation in most instances since this is a non-cash charge Strengths of EBITDA Why do we ...
  • Levered Free Cash Flow Calculation flow which is the same formula as unlevered free cash flow, but less interest and mandatory principal ... free cash flow is calculated as Net Income (which already captures interest expense) + Depreciation ... Here's a Quick Way to Value Unlevered & Levered Cash Flows DCF
  • Valuation under Discounted cash flow forecast period how can we increase value of organisation. The increase in value is equal to PV of cash ... flow of additional 3 years. Not vary sure, is this correct way to value. Forecast period ... I am little confused on DCF Valuation. I did a valuation of a cash inflow for 2 years and terminal ...
  • Notes for Technical Interview Questions cash flows you are discounting- If you are doing a DCFF, then you would use a WACC, since it accounts ... for both Debt and Equity capital and the cash flows you are discounting are "pre-financing" ... the Cost of Equity since the cost of debt has already been taken into account in the cash flows that ...
  • Does unlevered cash flow exclude interest? includes interest and the other say it excludes. which one is it? Unlevered Cash Flow The short answer is ... no, unlevered cash flow does not include interest. The name itself is a give-away. ... interest expense in your calculation. It is important to understand how these concepts come
  • Free Cash Flow & Enterprise Value question. explain what is going on or why things are as they are. I would like to start by telling you how I find ... + After tax interest on debt- After tax interest on cash and marketable securities So I do this for ... university was that FCF is not profit, this is just the cash available at the end of the projected year for ...
  • More suggestions...

Or maybe the following WSO members have something to say: Rajesh-Kumar WillC Ander-Thompson

Hope that helps.

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 

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