Question: 4. What is the logic behind estimating FCF using Formula 1 (FCF = EBIT(1-TaxRate) + Depr - Capex - Chg NWC + Terminal CF)? Why

4. What is the logic behind estimating FCF using Formula 1 (FCF = EBIT(1-TaxRate) + Depr - Capex - Chg NWC + Terminal CF)? Why are the mathematical signs of each variables the way they are? For instance, why is it "+ Depr" and "- Chg NWC"? 5. What are pro-forma financial statements? How are they different to the financial statements you have been learning about so far

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

ualitative questions (Lecture content summary) 1. What are the main differences in the way accounting and finance view cash flows? 2. What is Free Cash Flow? From whose perspective is it measured? 3....

I have a Project I am working on for Portfolio Management. I finished most of the data entry and creating of tabs, but I still have about 30% of the project that I need help on. I expect it to take...

You are a financial analyst at GodivaSisters, a major investment banking firm. Your supervisor has just handed you a difficult assignment. You must review the work of an intern, who after given the...

You are a financial analyst at Berkeley Capital, a major investment banking firm. Your supervisor has just handed you a difficult assignment. You must review the work of an intern, who after given...

You are a financial analyst at GreenRock, a major investment banking firm. Your supervisor has just handed you a difficult assignment. You must review the work of an intern, who after given the pro...

1. When performing a DCF in M&A, what value is being calculated? How long is the forecast period, typically? What is the terminal value? How are each calculated? 2. Notice footnote 3 on working...

added information 2 FINANCIAL STATEMENTS 3 Balance Sheet Check Historical Results 2011 2012 2013 2014 2015 Forecast Period 2016 2017 2018 2019 5% +5% Rank ABS Output Driver Pos Neg 176 Assumption 177...

Hello. Can you help with this four question problem? Case PRIVATE EQUITY CASE: MERGER CONSOLIDATION The questions below COMBINE the Ohio & Maryland PT acquisitions as if they are a single c Learning...

5. How is the cost of equity estimated? What is the risk-free rate? What is the risk premium? What does Beta measure? 6. How is FCF calculated? 7. What is RONA? Why is it important? What are its two...

What were the three main stages of deepening that occurred in the European Community after the passage of the Treaty of Rome?

Prepare a flexible budget for 10,000, 12,000, and 14,000 units of output, using the following information: Variable costs Direct materials.......$10.00 per unit Direct labor...........$3.00 per unit...

6 54=625 Write as a power of 5 625 a 6252 b 625% c

In the "Erin Brockovich" movie, which one would you specify was the case of fraud involved? Write a research report on this.