首页 | 学习中心 | 注册 登录
返回列表 发帖
bleach

Rank: 2

UID
223359 
帖子
264 
主题
56 
注册时间
2011-7-11 
最后登录
2014-8-7 
1# 跳转到 » 倒序看帖
打印
tT
发表于 2011-7-11 19:27 | 只看该作者

Free Cash Flow to the Firm

Thank, interest, computing, like
Study Session 12, Reading 41.

The formula is FCFF = NI + Dep + Int(1-t) - FCInv - WCInv

In computing FCFF, why do you add back the full value of depreciation expense and not the after-tax value (like interest expense)?

Thank you for your help.
收藏 分享

economicz

Rank: 2

UID
223395 
帖子
345 
主题
9 
注册时间
2011-7-11 
最后登录
2016-4-19 
2#
发表于 2011-7-11 19:27 | 只看该作者
its 1) non-cash 2) if acquired, the mgt can change depreciation and affect taxes, at least my opinion

TOP

Pegasus2008

Rank: 2

UID
217794 
帖子
294 
主题
142 
注册时间
2011-5-24 
最后登录
2012-9-12 
3#
发表于 2011-7-11 19:27 | 只看该作者
That's how I see it too.

TOP

defour44

Rank: 2

UID
223402 
帖子
263 
主题
11 
注册时间
2011-7-11 
最后登录
2014-8-6 
4#
发表于 2011-7-11 19:27 | 只看该作者
Because depreciation has already tax sheltered your income (you deducted it already in determining NI), and the remaining amount is entirely non-cash.

TOP

DSquaredSlim

Rank: 2

UID
223422 
帖子
295 
主题
5 
注册时间
2011-7-11 
最后登录
2014-8-4 
5#
发表于 2011-7-11 19:27 | 只看该作者
Just imagine if you own the whole firm and do not have any bonds then you would pay tax for the interest. That is the reason you only save 70% of the interest and not in the case of depreciation.

TOP

genuinecfa

Rank: 2

UID
223423 
帖子
370 
主题
14 
注册时间
2011-7-11 
最后登录
2014-8-7 
6#
发表于 2011-7-11 19:27 | 只看该作者
I pay interest of $10 million. Assuming a 30% tax rate, i reduced my taxes by $3 million (for a net cash interest expense of $7 million). Therefore, i add back my net interest expense ($7 million) to get to FCFF

I record depreciation of $100 million, which reduces my taxes by $30 million. I must add back the entire $100 million, because it was a non cash expense, and I'm trying to arrive at a cash number.

TOP

SpyAli

Rank: 2

UID
223440 
帖子
306 
主题
14 
注册时间
2011-7-11 
最后登录
2014-8-6 
7#
发表于 2011-7-11 19:27 | 只看该作者
when you get NI, you deduct the full amount of Dep.

so you have to add full amount of Dep. don have to consider the tax.

TOP

Kapie

UID
223384 
帖子
638 
主题
62 
注册时间
2011-7-11 
最后登录
2014-8-6 
8#
发表于 2011-7-11 19:27 | 只看该作者
Unliever is right, unlike interest, depreciation is subject to different rates for tax and accouting purposes. If depreciation for both tax and accouting purposes is the same, the tax benefit is already built into Net Income. Otherwise, the difference is recognized by working capital adjustments (increases/decreases to DTA or DTL).

TOP

jarobi04

Rank: 2

UID
223400 
帖子
317 
主题
11 
注册时间
2011-7-11 
最后登录
2014-8-2 
9#
发表于 2011-7-11 19:27 | 只看该作者
also another way to think about it...

differing companies may have different levels of debt / different interest payments. if you add back the After-tax interest to the calculation - it becomes more comparable across companies.

CP

TOP

返回列表