FCFF Equation

CFA Level II Equities
#1

Is the “DEP” in the FCFF formula also to include all other Non Cash Charges?

I keep seeing the following two formulas…

FCFF = EBIT(1-t) + Dep - FCinv - WCinv

FCFF = EBITDA(1-t) + Dep(t) - FCinv - WCinv

also written as…

FCFF = EBIT(1-t) + NCC - FCinv - WCinv

FCFF = EBITDA(1-t) + NCC(t) - FCinv - WCinv

Can somebody please clarify if the equation is just Dep or do you include all NCC’s?

Thanks.

#2

There is a significant amount of material on what is included in NCC, it does go beyond depreciation and amortization, very testable, I would read it

#3

The assumption is that the first two equations only have depreciation as NCC, so that’s why.

#4

Yup thanks. Which is why I was asking if all those other fun NCCs were included or if it was just dep.