I’m just curious to know wether SGA is considered a cost in the ATOCF. I realize that one is a measure of cash flows while the other is a measure of profits. Still, I would think that SGA is a cost so that it should be included in both.
As I understand it, here are the equations for both measures:
ATOCF = (Sales - Costs - Depreciation)*(1-tax) + Depreciation
NOPAT = (Sales - Costs - SGA -Depreciation)*(1-tax)
Is there a reason why SGA is not in ATOCF?