huangxiaoxie

CPAbeatsCFA Wrote:
-------------------------------------------------------
> in practice, borrowing more debt would change your
> operations and leverage and probably offer more
> gross margin giving you a higher NI starting point
> for FCFF.


More leverage dosn't equate to higher growth in EBIT, perhaps in NI, but that is not what we are looking at with FCFF. (DOL wouldent change)

Are you thinking of a company that retains and reinvests all profits? Which would perhaps be higher? If so, be careful, they could also be lower..

huangxiaoxie

no change, because the interest expense is simply adding back what was deducted in arriving at net income.