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