FCF caculation should, income, discount, net

pliao2005

the amortization of a bond discount should be added back to net income, and the accretion of the bond premium should be subtracted from net income to caculate FCFF, why?

pliao2005

谢谢楼上。

shxjm

是不是这样理解.
因为 coupon payment is reported as operating activities in the cash flow statement
对于 discount bond, coupon payment > interest expense, 所以( coupon payment - interest expense) 应该 add back to net income.

而对于 premium bond, 因为 coupon payment < interest expense, the difference can be viewed as a source of borrowing, 所以应该 subtract from the net income.