When there are temporary differences between Book Taxes & Actual Taxes, then DTA/DTLs are created to reconcile these.
However, DTAs & DTLs are not created for permanent tax differences. So how does this reconcile?
When I calculate the Free Cash Flow, I would started with the Net Income & add back non-cash expenses. So if actual tax is lesser than Book Taxes then I would need to add the difference & if actual tax is more than I would need to subtract the difference. How would I get the difference to do this operation?
For temp differences, you check the change in DTAs/DTLs in the balance sheet & figure it out, but how would you do this for permanent differences?