Session 12: Equity Investments: Valuation Models
Reading 43: Free Cash Flow Valuation
LOS c: Discuss the appropriate adjustments to net income, earnings before interest and taxes (EBIT), earnings before interest, taxes, depreciation, and amortization (EBITDA), and cash flow from operations (CFO) to calculate FCFF and FCFE.
The following information is derived from the financial records of Brown Company for the year ended December 31, 2004:
|
Sales |
$3,400,000 |
|
Cost of Goods Sold (COGS) |
(2,100,000) |
|
Depreciation |
(300,000) |
|
Interest Paid |
(200,000) |
|
Gain on Sale of Old Equipment |
400,000 |
|
Income Taxes Paid |
(300,000) |
|
Net Income |
$900,000 |
- Brown issued bonds on June 30, 2004 and received proceeds of $4,000,000.
- Old equipment with a book value of $2,000,000 was sold on August 15, 2004 for $2,400,000 cash.
- Brown purchased land for a new factory on September 30, 2004 for $3,000,000, issuing a $2,000,000 note and paying the balance in cash.
Cash flow from operations less capital expenditures is:
Brown’s cash flow from operations (CFO) was $800,000 = ($900,000 Net Income + $300,000 depreciation ? $400,000 gain).
Capital expenditure cash flows were ?$1,000,000 for the factory and $2,400,000 cash received from sale of the old equipment for a net inflow of cash of $1,400,000.
$2,200,000 = ($800,000 + $1,400,000).
[此贴子已经被作者于2011-3-21 11:25:02编辑过] |
发表于 2011-3-18 14:46
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