PROJECTED TOTAL CASH FLOWS

VALUATION FRAMEWORK

 

1.Projected Cash Flows from Operations

Earnings before interest and taxes (EBIT)

Less:     Total income tax expense

Net income after tax before interest (NIATBI)

Plus:     Depreciation expense

             Deferred tax expense

Less:     Increased investment in net working assets

             Increase in accounts receivable

            Plus:     Increase in inventory

                                Increase in prepaid expenses

                                Increase in current assets - other

            Less:     Increase in accounts payable

                                Increase in income taxes payable

                                Increase in accrued expenses

                                Increase in investment in net working assets

Projected cash flow from operations

 

2. Projected Cash Flows for Investment

 

Change in plant and equipment (net)

Plus:     Depreciation expense

New investment in plant and equipment

Plus:     Increased investment in other assets

 

Projected cash flow for investment

 

3. Projected Total Net Cash Flows

 

Projected cash flow from operations

Less:     Projected cash flow for investment

 

Annual net cash flow

 

PROJECTED CASH FLOW TO EQUITY CAPITAL

VALUATION FRAMEWORK

 

Projected Cash Flows from Operations

 

Net income (NI)

Plus:     Depreciation expense

             Deferred tax expense

Less:     Increased investment in net working assets

             Increase in accounts receivable

            Plus:     Increase in inventory

                                Increase in prepaid expenses

                                Increase in current assets - other

            Less:     Increase in accounts payable

                                Increase in income taxes payable

                                Increase in accrued expenses

                                Increase in investment in net working assets

Projected cash flow from operations

 

Projected Cash Flow from External Financing

 

Increase in current debt obligations

Increase in total long-term liabilities

 

Projected cash flow from external financing

 

Projected Cash Flows for Investment

 

Change in plant and equipment (net)

Plus:     Depreciation expense

New investment in plant and equipment

Plus:     Increased investment in other assets

 

Projected cash flow for investment

 

Projected Total Net Cash Flows

 

Projected cash flow from operations

Projected cash flow from external financing

Less: Projected cash flow for investment

 

Annual net cash flow