Having a difficult time understanding exhibit 4 on page 278. Anyone worked through this one yet? What I don’t understand: 1) Where does the computation of taxes come from? 2) How are they coming up with the DCF values? I’m friggen lost! Thanks for any help.
The em markets reading is a highly stylized reading. Real taxes has to be computated off of nominal ebt, then calculate taxes using te effective tax rate that will be provided, then index down according to either a rate of inflation given to you , or a % change in a price index. Conversely they could supply ebt and eat and you have to imply nominal tax paid or the effective tax rate then index nominal tax down. The DCF values are forecasted off of associated changes in the i/s and b/s changes. If I remember correctly it’s a NOPLAT number that the chapter goes through what the components are, and then you will likely have to infer capex off of changes in the noncurrent assets on the balance sheet and likewise for working capital investment then net these inorder to arrive at a FCF like metric. eocs in the back of the book might be good to try and work if it gets too maddening for you. Sort of like a bacward induction method for test preparation if you will. Then return to reading and see if it clears the mud a little. Then you may have to rinse and repeat again. Rely on study providers where necessary to help if you just get totally screwed up.