Question: Formula for calculating free cash flow valuation? Having issues specifically with tax rate to determine FCF. If given the following variables: a) Earnings before interest
Formula for calculating free cash flow valuation? Having issues specifically with tax rate to determine FCF.
If given the following variables:
a) Earnings before interest and taxes (EBIT)
b) Depreciation and Amortization (D and A)
c) Capital Expenditures (CapEx)
d) Changes in Working Capital
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My guess is that this is the formula:
EBIT x (1-tax rate)
+depreciation/amortization
-change in working capital
-capital expenditures
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If so, and I plug in the corresponding numbers, how does:
30.2 x (1-tax rate)
+27.7
-4.4
-16.3
equal an FCF of 35.43?
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