why do we use FCFF over NOI/EAT/NOPAT when we forecast growth in earnings?
here’s what I think, EAT - I’m assuming earnings after tax, which is NI, which has financing activities, noncash activities, and no considering for WC or FC investments, plus it has accounting manipulation NOPAT - EBIT(1-tax) - same as NI except it doesn’t have financing activities NOI - if I remember correctly, this is only related to real estate FCFF on the other hand takes care of all the issues above, so you use that for firm valuation anyone else?
Sales - COGS - SGA - D/A = EBIT EBIT = Operating CF = NOI = Net Operating Income = Earnings after Tax = NOPAT someone correct me if i am wrong…
pacmandefense Wrote: ------------------------------------------------------- > Sales - COGS - SGA - D/A = EBIT > > EBIT = Operating CF = NOI = Net Operating Income = > Earnings after Tax = NOPAT —EBIT is operation income, not cash flow, D/A does not result in cash flow > > someone correct me if i am wrong…
I don’t think NOPAT includes financing and investing
EBITDA = Op CF EBIT = Op Income thanks for correcting me.
pacmandefense Wrote: ------------------------------------------------------- > EBITDA = Op CF —I wouldn’t say EBITDA is operating CF, it includes noncash revenue, such as account receivable…which is why CFO is not EBITDA… > EBIT = Op Income > > thanks for correcting me.
CFO also contains tax