2) Two Basic Types of Cash Flow: Operating Cash Flow and Free Cash Flow Define the following with respect to a division or a firm or a project: Rev CGS SGA EBITDA Dep EBIT Int EBT Tax tc NI Capex NWC = = = = = = = = = = = = = Revenues Cost of goods sold Selling, general, and administrative expenditures Rev – CGS – SGA Depreciation and Tax-deductible Amortization EBITDA – Dep Interest Expenses EBIT – Int Total cash taxes paid Corporate (cash) tax rate (= Tax/EBT) Net income = EBT – Tax = EBT*(1 – tc) Net capital expenditure Net working capital (= Curr. assets – Curr. liabilities)
This note was developed by Anant K. Sundaram, Faculty Director of Executive Education, Tuck School of Business at Dartmouth. © 2003 (Revised 5/04).
Also define:... [continues]
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