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Another FCF question
I’ve seen FCF calculated in the following ways in commercial underwriting: FCF=EBITDA - cash taxes - cashu interest - change in WC - CAPEX FCF=CFO - CAPEX - dividends how would you determine which to use?
Changes in Working Capital for FCF
I have seen the calculation for change in WC on CF stmt done many different ways for calculating FCF. For context, some FCF analysis I've looked at takes into account the change in all operating assets and liabilities from CF while others remove items such as change in Op lease liabilities from the...
LFCF to include PIK interest or no?
Hey all! Some context - currently a junior working at a buyside shop, and very common for our team to build cashflow down to LFCF and bridge LFCF to change in cash with one-offs, M&A and debt movements. The idea being LFCF should be a "run-rate" number that measures the cashflow to equity holders...
Valuation question - Equity research report
I was reviewing the model of a gaming company prepared by the equity analyst of a top bank. When calculating Free Cash Flow, I noticed that they added back taxes after having substracted it in Cash flow from operating activities. Perhaps easier sharing their formula >> FCF = Cash flow from operating...
Depreciation in FCF calculation
Hello. This might be somewhat a confusing question but I hope someone can explain it to me better than my prof haha So for free cash flow, one of the formulas is FCF = NOPAT - △NWC + Depreciation - △Capex And Capex is generally △Capex = △PP&E + Depreciation . So what's the point of adding...
Can I go from UFCF to LFCF? Help a monkey understand, please
Hi, I have an interview coming up and had a question about UFCF and LFCF. According to my textbook: 1) FCF = Cash flow to creditors + Cash flow to stockholders FCF = Operating cash flow - Net Capital Spending - Changes in net working capital where : UFCF* = EBIT - Taxes + D&A - CapEx - Changes in...
FCF formula - two formulae are different?
Hi everyone: This might be a dumb question, but I'm stuck on it and would really appreciate your help. I'm reading both Breaking Into Wall Street and WSO PE guide, and it seems that they have two formula for FCF calculation that don't 100% tie up. I wanted to check if I misunderstood them... From...
Deriving a PT from FCF yield
Hey there, I think I'm missing something basic here. I'm familiar with deriving a price target for a stock based on things like EBITDA multiples, but I've seen people say things like "At $N EBITDA and a X% fcf yield, the implied price is $Y/sh for a Z% upside." What is the math there for deriving a...
Question for smart people only: Will D/E change after privatizing a state-owned enterprise?
Hello smart friends, I am tasked with valuing a state-owned airport that's in consideration of privatization. The enterprise is 100% debt financed and is not for profit. I must use DCF . I projected the FCF with the assumption that after privatizing the airport will have to expand operations in...
FCFE and terminal value?
Hi! I'm trying to value a holding company that owns 3 projects, one of which has amortizing debt (changing leverage) for acquisition purposes. I'm fine with valuing the firm as a whole using FCFF and assuming it will be refinanced to a target D/E, but my questions are as follows: 1.- If I were to...
How Tax Rate affects Enterprise Value (EV)
Hi all, I have some questions on an undying topic that's continuously discussed on the street: how tax rate affects EV valuation of companies. Some people argue it's positively correlated to EV while others argue it's the opposite. Based on my experience/observation, I think it's positively...
Relationship between FCF and Cash on the Balance Sheet
Hey guys. I am currently pre-university, self-teaching myself in investing. I have been reading books on accounting and investing and i can firmly admit that i get confused sometimes on even plain and simple things. So my question might seem to you extremely stupid, but i really got confused on this...
Different ways to calculate FCF?
Quick question, and I'm probably missing something stupid here, but I'm working through an example LBO that a friend sent me from one of his MBA courses. Values are as follows: EBITDA - 190 D&A - 30 EBIT - 160 CapEx - 29 Change NWC- -40 The model template calculates FCF like this: EBITDA - CapEx -...
Including intangible assets in CAPEX? (Morningstar vs. Bloomberg analysts) DCF model
Looking at basic DCF for AAPL : When Morningstar calculates AAPL's FCF from CFO (2013 10k ) they calculate: Free Cash Flow = Cash flow from operations - (Payments for property, plant and equipment + Payments for acquisitions of intangible assets ) Bloomberg doesn't include intangibles in their...
depreciation is tax deductible
Hi Guys, Had a question about free cash flow . Why dont we add back depreciation after tax since it is tax deductible? I mean we add back interest expense to CFO after tax as well. Just a little confused. Appreciate any answers.
FCF - is it CFO + CFI + Interest Expense, or CFO + CFI + CASH Interest Expense
Unlevered Free Cash Flow - is it CFO + CFI + Interest Expense, or CFO + CFI + CASH Interest Expense CFO takes the amort/discount into account - but if adding back to approximate FCF I think it should be Cash Interest expense, just confirming...
How do investors retrieve FCF?
Hi to everyone! It could be a stupid question, but I just don't get it: how do investors retrieve FCF ? I mean, all valuation is based on FCF — ok, we have FCF: +100 this year, what does it give to investor? It only means that company holds +100 in cash on its bank account, but to retrieve it,...
EBIT Question!
Hi guys, To calculate FCF for cash flow projections, the formula states FCF = EBIT(1-T)....... (and so on). My question is - is it possible to use EBIT(1-T) and (EBIT - Taxes) interchangeably? For (EBIT - Taxes), the amount of taxes can simply be obtained from the income statement/cash flow...
Free cash flows and capex accounts payable
Maybe a stupid question, but when you calculate free cash flows by subtracting capex from EBITDA and the change in working capital, do you normally adjust for the fact that some capex might be sitting in accounts payable and hence should be backed out of accounts payable in order to not count it in...
DCF Taxes
quick question: when I do DCF and trying to figure out FCF should I go with taxes that were actually paid or taxes that should have been paid for each corresponding period in the past? Thanks a lot!
EBIAT - Earnings Before Interest After Taxes - more information
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FCF vs CF before Financing
received an interview question: what's the difference between FCF and CFBF at a HIGH level? I understand CF before financing includes a couple of other items but overall levered FCF = CF before financing?
How to handle infinite growth in a FCF model
I am currently building a model for a firm that grows at a constant rate for 5 tears, then after that, is expected to grow at 1% for infinity. how do i model the sales and FCF for that? Also, when building a model, does PPE grow at the same rate as sales? Would the same apply to LTD if no other...
Help!! LBO of a leasing company; include interest on capital leases in pre-financing fcf?
Peeps - desperately looking for some quick guidance on doing an lbo model for a leasing company (they buy ships via capital leases then lease them out to travel companies). Do I include the interest they pay on the capital leases in the FCF before (or after??). I.e. FCF will be net of the interest...
Technical Concept - Help Needed
So, I'm having trouble understanding a concept, and I thought maybe someone can help me out. It has to deal with unlevered/levered FCF . So here it is: So, from what I understand, when it says unlevered FCF , it means stripped of debt. And when its levered, it takes into account the capital...
real cash expenses NOT reflected in DCF...possible?
Say somehow you know a company will be pursuing an aggressive acquisition policy going forward with its cash balances, or will be purchasing a lot of marketable securities with its cash in the future. Both of these represent investing cash flows, but it's not reflected in FCF since they are not...
FCF, LFCF correct formula?
I've noticed that there some conflicting formulas for FCF (unlevered), which one is correct? Start with NI: FCF = NI + D&A - change NWC - CapEx Start with EBIT: FCF = EBIT - taxes + D&A - change NWC - CapEx These seem to be conflicting because interest is subtracted to get NI, while interest remains...
For those good at calculating free cash flows
So free cash flow to equity is typically just cash flow from ops less capex (I guess some people include debt issued and repaid here as well), and free cash flow to the firm excludes interest expense but is similar. Let's say a company issued either debt or equity in a year and used the cash to...
FCF and Pensions
Anyone know how pensions work in unlevered FCF calculation?
Negative Operating Income and FCF's
I'm building a DCF model. How do I calculate tax expense when Operating Income (EBIT) is negative to get to FCFs? Net Operating Loss Carry Forward [quote "dosk17 - Retired Investment Banker"]Basically here is what you do: As the posters said above, if you have negative operating income then you...
FCF - Term Loan A vs Term Loan B
I was recently in an interview and asked to calculate the PF free cash flow in the following scenario. The acquisition given was a company that had $40mm of EBIT, $10mm of D&A, $10mm of Capex, Change in Working Capital was assumed to be $0 and the tax rate was 40.0%. The debt to finance the...
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