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Flashcards in Free Cash Flow Deck (20):
1

Dep and Amort- Adjustment to Net Income->

ADD. I/S or CFO

2

Impairment/Write Down- Adjustment to Net Income->

ADD. I/S

3

Gains (losses) on asset sale or early debt retirement- Adjustment to Net Income->

Subtract (Add). I/S

4

Restructuring Expense (income)- Adjustment to Net Income->

Add (Subtract). I/S

5

Deferred Tax Liability- Adjustment to Net Income->

Add. I/S B/S
*If unlikely to reverse

6

Amortization of bond discount (premium) Adjustment to Net Income->

Add (Subtract). CFO

7

Net FC Investment Adjustments

additions - proceeds

8

Investment in Working Capital

WC includes all short term operating assets and libs
Excludes->cash and cash equivs, short term int bearing debt, notes payable, current of long term debt, dividends payable

9

Working Capital Adjustments

direct relationship between changes in libs and changes in cash flow
->increase in liability account is source of additional cash
->decrease in liability is use of cash (subtract)

10

Net Borrowing is on only

FCFE

11

Net Borrowing includes

Repayment of:
long term debt
notes payable
current portion of long term debt
(Adding back)
Cash flow = B/S change in debt - amortized discounts + amortized premiums

12

FCFF formula

NI + NCC + int(1-t) - WC inv - FC inv

13

FCFE formula

NI + NCC - WC inv - FC inv + net borrowing

14

FCFE via FCFF

FCFF - Int(1-t) + net borrowing

15

NonCash Charges

pply to both FCFE and FCFF
-adjustments for noncash decrease and increases in NI based on accrual accounting

16

FCFF via CFO

CFO + Int(1-t) - FC inv

17

FCFE via CFO

CFO - FC inv + net borrowing

18

FCFF via EBIT

EBIT (1-t) + dep - WC inv - FC inv

19

FCFF via EBITDA

EBITDA(1-t) + (depr * t) - WC inv - FC inv

20

How many values for FCFF and FCFE

ONE FCFF and ONE FCFE