Scribd Logo
Upload

Welcome to Scribd!

  • 222 views

    Free Cash Flows

    Uploaded by

    Parvesh Aghi
    The document discusses free cash flows and how to estimate them for a firm and for equity shareholders. It provides formulas for calculating free cash flow for the firm (FCFF) and free cash flow for equity (FCFE). FCFF is calculated as EBIT (1-T) plus depreciation and non-cash charges, minus capital expenditures and changes in working capital. FCFE further subtracts debt repayments and adds debt proceeds. The document then applies these formulas to calculate the annual FCFF and FCFE for XYZ Limited from 2011 to 2015 using projected financial figures.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd

    Free Cash Flows

    Uploaded by

    Parvesh Aghi
    222 views8 pages
    The document discusses free cash flows and how to estimate them for a firm and for equity shareholders. It provides formulas for calculating free cash flow for the firm (FCFF) and free cash flow for equity (FCFE). FCFF is calculated as EBIT (1-T) plus depreciation and non-cash charges, minus capital expenditures and changes in working capital. FCFE further subtracts debt repayments and adds debt proceeds. The document then applies these formulas to calculate the annual FCFF and FCFE for XYZ Limited from 2011 to 2015 using projected financial figures.

    Original Title

    free cash flows.ppt

    Copyright

    © © All Rights Reserved

    Available Formats

    PPT, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document discusses free cash flows and how to estimate them for a firm and for equity shareholders. It provides formulas for calculating free cash flow for the firm (FCFF) and free cash flow for equity (FCFE). FCFF is calculated as EBIT (1-T) plus depreciation and non-cash charges, minus capital expenditures and changes in working capital. FCFE further subtracts debt repayments and adds debt proceeds. The document then applies these formulas to calculate the annual FCFF and FCFE for XYZ Limited from 2011 to 2015 using projected financial figures.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    222 views8 pages

    Free Cash Flows

    Uploaded by

    Parvesh Aghi
    The document discusses free cash flows and how to estimate them for a firm and for equity shareholders. It provides formulas for calculating free cash flow for the firm (FCFF) and free cash flow for equity (FCFE). FCFF is calculated as EBIT (1-T) plus depreciation and non-cash charges, minus capital expenditures and changes in working capital. FCFE further subtracts debt repayments and adds debt proceeds. The document then applies these formulas to calculate the annual FCFF and FCFE for XYZ Limited from 2011 to 2015 using projected financial figures.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    You are on page 1of 8
    At a glance
    Powered by AI
    The key takeaways are about estimating cash flows, calculating free cash flows of the firm and free cash flows for equity shareholders, and projected financial figures for XYZ Limited.

    Free cash flows are the cash flows generated by the company that are available for distribution to all investors (debt and equity) after meeting the capital expenditure needs of the business. They are calculated as PAT + Depreciation - Capital Expenditures - Change in Working Capital.

    Free cash flow of the firm includes interest payment to debt holders, while free cash flow for equity excludes interest payment and includes proceeds/repayment from debt issues. Free cash flow of the firm considers cash flows for all investors including debt holders.

    FREE CASH FLOWS

    Estimating Cash Flows

    2
    3
    CASH REVENUES

    Working capital
    Investment Cash operating expenses
    Including taxes but
    excluding interest
    Fixed capital
    investment

    FCFF
    Interest payment to
    bond holders

    FCFE Net Borrowing


    from
    bondholders
    FREE CASH FLOWS OF FIRM V/S EQUITY
    FREE CASH FLOW FOR ALL FREE CASH FLOW FOR EQUITY
    INVESTORS SHARE HOLDERS

    EBIT (1-T) PAT

    + Depreciation and non cash charges + Depreciation and non cash charges

    - Capital Expenditures - Capital Expenditures

    - Changes in Working Capital - Changes in Working Capital

    – Repayment of Debt

    + Proceeds from debt issues

    5
    What are Free cash flows and determine the free cash flows
    of XYZ Limited from following projected figures ( in Lakhs

    YEAR 2011 2012 2013 2014 2015

    Rs lakhs

    PBIDT 350 400 470 525 600

    Depreciation 100 135 145 110 90

    Interest 55 56 58 62 77

    Capital Expenditure 250 100 75 20 55

    Inc in Working Capital 35 38 42 45 52

    Repayment of debt 50 450

    Proceeds from Debt issue 500

    Tax 35%

    6
    FREE CASH FLOW OF XYZ LTD
    FREE CASH FLOW OF THE FIRM
    2011 2012 2013 2014 2015
    PBIDT 350 400 470 525 600
    Depreciation 100 135 145 110 90
    PBIT 250 265 325 415 510
    PBIT(1--T) 162.5 172.25 211.25 269.75 331.5
    Depreciation 100 135 145 110 90
    Capital Expenditure 250 100 75 20 55
    Inc in Working Capital 35 38 42 45 52

    FREE CASH FLOW OF A


    FIRM -22.5 169.25 239.25 314.75 314.5

    7
    FREEFREECASH 2011
    FLOW
    CASH FLOW FOR EQUITY
    2012
    FOR EQUITY
    2013 2014 2015
    PBIDT 350 400 470 525 600
    Depreciation 100 135 145 110 90
    Interest 55 56 58 62 77
    PBT 195 209 267 353 433
    Tax 68.25 73.15 93.45 123.55 151.55
    PAT 126.75 135.85 173.6 229.45 281.45
    Depreciation 100 135 145 110 90
    Capital
    Expenditure 250 100 75 20 55
    Inc in Working
    Capital 35 38 42 45 52
    Repayment of
    debt 50 450
    Proceeds from
    Debt issue 500
    FREE CASH
    FLOW FOR
    EQUITY 441.75 132.85 201.6 224.45 -185.55

    You might also like

    pFad - Phonifier reborn

    Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

    Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


    Alternative Proxies:

    Alternative Proxy

    pFad Proxy

    pFad v3 Proxy

    pFad v4 Proxy