Lecture 1 Formulas

Question 1

Equity free cash flows (unlevered)

Answer 1

EFCFua = EBIT(1-Tc) + DA - deltaNWC - CAPEX

Question 2

Equity free cash flows (levered)

Answer 2

EFCF L = EBIT(1-Tc) - I(1-Tc) + DA - deltaNWC - CAPEX- P + NP

Question 3

FFCF

Answer 3

= EBIT (1-Tc) + DA - CAPEX - deltaNWC

Question 4

CAPEX

Answer 4

= net PPEn - Net PPEn-1 + Depreciation

Net PPE -> balance sheet
Depreciation -> income statement

• if CAPEX is positive, that means NPPE this year increased so that’s a cash outflow. So a minus
  If negative then - (-CAPEX) and plus.

Question 5

DA

Answer 5

Depreciation amount: you add it as positive

A non cash amount

Question 6

deltaNWC

Answer 6

= (Debtors + Inventory - Creditors) @n - (n-1)
Do -(Tn - (Tn-1)) -> easiest way to do it.

Question 7

P

Answer 7

Principal payment on debt

Question 8

NP

Answer 8

Long-term debt (n) - Long-term Debt(n-1)

Question 9

Steps

Answer 9

1. Find EFCF ua AKA PFCF
2. Find EFCF levered
3. Debt holder FCF

Question 10

DHFCF

Answer 10

= I(1 - Tc) - NPC + Principal