debt payback period.

CFA Level II
#1

just curios how many of you recall the formula… i dont.

#2

free cash flow + interest / interest + principal payment = Debt service covg total debt / discretionary cash flow = DBP

#3

barthezz Wrote: ------------------------------------------------------- > just curios how many of you recall the > formula… > > i dont. Free cash flow+interest/annual principal payment +interest

#4

CFABLACKBELT Wrote: ------------------------------------------------------- > barthezz Wrote: > -------------------------------------------------- > ----- > > just curios how many of you recall the > > formula… > > > > i dont. > > Free cash flow+interest/annual principal payment > +interest This is for debt service coverage

#5

DBP=total debt/discretionary cash flow discretionary cash flow = CFO-CAPEX-Dividends Paid

#6

Oops thanks.

#7

LET’S DO THIS!!! Net Income + Non-cash charges (like Depr) -------- = Funds from operations - increase in NWC --------- = operating cash flow - fixed capital expenditures ------------ = free operating cash flow - dividend payments ---------- = discretionary cash flow + asset sales + dispositions - acquisitions ---------- = prefinancing cash flow

#8

how’d I do?

#9

looks good to me. Now here are the formulas: Funds from oprations / Total debt Funds from oprations / capital spending requirements free operating cash flow + Interest / Interest free operating cash flow + Interest / Interest + Annual Principal Payment = Debt Service Coverage Ratio Total debt / discretionary cash flow = Debt Payback period

#10

free operating cash flow + Interest / Interest this one is easy to remember because interest is missing from free operating cash flow to make it FCFF.