Year 1 Year 2 -111.00 19254.00 2219.00 4351.00 12684.00 Assume that there is no interest receivable or payable remaining at the end of the year. 43.59 6.00% Interest yield 635.65 10.00% Interest expense 12091.94 3022.99 25.00% Tax rate 9068.96 There are no deferred taxes. 1479.00 Checks NCF - Change in cash = 0 A- (L+E) -0 Net operating assets - Invested capital = 0 Method 1 - Method 2 =0 Methodi - Method3=0 Enterprise cash flow + Financing cash flow = 0 Income statement Sales COGS SG&A = Operating income Interest income Interest expense Eamings before tax Tax expense = Net Income Depreciation in COGS and SG&A Ending balance sheet Cash needed for liquidity - Current financial assets Current receivables Inventories = Current operating assets = Current assets Non-current financial assets Long-term receivables PPBE, net - Non-current operating assets = Non-current assets = Total assets Note payable to the banks = Current financial liabilities Accounts payable to suppliers Current deferred revenue Salary payable = Current operating liabilities = Current liabilities Long-term debt = Non-current financial liabilities Long-term deferred revenue Long-term accrued warranties -Non-current operating liabilities = Non-current liabilities = Total liabilities 671.00 782.00 671.00 782.00 2781.00 3451.00 4621.00 4921.00 7402.00 8372.00 8073.00 9154.00 0.00 0.00 1498.00 1792.00 6400.00 7900.00 7898.00 9692.00 7898.00 9692.00 15971.00 18846.00 719.00 219.00 719.00 219.00 1976.00 2319.00 1231.00 1345.00 612.00 692.00 3819.00 4356.00 4538.00 4575.00 6534.00 5241.00 6534.00 5241.00 987.00 1029.00 1820.00 1400.00 2807.00 2429.00 9341.00 7670.00 13879.00 12245.00 2000.00 6500.00 92.00 101.00 2092.00 6601.00 15971.00 18846.00 0.00 0.00 0.00 0.00 0.00 0.001 0.00 0.00 Paid-in capital Retained earnings = Total equity = Total liabilities + Total equity Balance sheet metrics Not useful Working capital: Current assets - Current liabilities Need for invested capital Current operating assets - Current operating liabilities = Current net operating assets or the need for operating working capital + Non-current operating assets - Non-current operating liabilities = Non-current net operating assets or the need for fixed capital = Net operating assets or the need for invested capital Source of invested capital Financial liabilities Less Financial assets = Net financial liabilities or net debt Equity = Invested capital Indirect GAAP cash flows Net income + Depreciation and amortization Change in operating working capital - Change in non-current operating assets other than PP&E and intangibles + Change in non-current operating liabilities = OCF -Capex -Change in S.T. Investments = ICF Change in principal portion of debt Change in capital (Dividends) = FCF = NCF Enterprise free cash flows Enterprise free cash flow: Method 1 Operating income after tax; NOPAT; EBIAT; EBIT*(1-tax); Unlevered or prefinancing net income - Change in net operating assets = Unlevered or enterprise free cash flow 0.001 0.00 0.00 0.00 0.00 0.00 0.00 Enterprise free cash flow: Method 2 Operating income after tax; NOPAT; EBIAT; EBIT*(1-tax); Unlevered or prefinancing net income + Depreciation and amortization Change in operating working capital - Change in non-current operating assets other than PP&E and intangibles + Change in non-current operating liabilities = OCF without interest Capex = Unlevered or enterprise free cash flow Enterprise free cash flow: Method 3 EBIT + Depreciation and amortization = EBITDA - Tax on EBIT Change in operating working capital - Change in non-current operating assets other than PP&E and intangibles + Change in non-current operating liabilities = OCF without interest Capex = Unlevered or enterprise free cash flow Recasted cash flow statement Enterprise activities Reported OCF Interest paid, after tax Interest (received), after tax = Unlevered OCF, i.e., OCF without interest Reported ICF Increase (decrease in investments of excess cash = Unlevered ICF = (Capex) = Unlevered or enterprise free cash flow Financial activities Interest (paid) net of tax benefit Principal borrowed (repaid) from financing cash flows A= (Payments) to debtholders Capital received (distributed) from financing cash flows Dividends (paid) from financing cash flows B= (Payments) to shareholders Interest received net of taxes paid (increase) decrease in investments of excess cash (increase) decrease in cash needed for liquidity C= (Change) in financial assets = Financial cash flows 0.00 0.00 0.00 0.00 0.00 0.00 0.00 YEAR 2 Unlevered Free Cash Flows Working capital Current operating assets [No - before the number.] Current operating liabilities [No - before the number.] Operating working capital Non-current operating assets [No - before the number.] Non-current operating liabilities [No - before the number.] Net operating assets Net debt Invested capital GAAP Operating Cash Flow GAAP Investing Cash Flow OPAT or EBIT*(1-tax) CapEx [Put - before the number.] Unlevered or enterprise free cash flow Year 1 Year 2 -111.00 19254.00 2219.00 4351.00 12684.00 Assume that there is no interest receivable or payable remaining at the end of the year. 43.59 6.00% Interest yield 635.65 10.00% Interest expense 12091.94 3022.99 25.00% Tax rate 9068.96 There are no deferred taxes. 1479.00 Checks NCF - Change in cash = 0 A- (L+E) -0 Net operating assets - Invested capital = 0 Method 1 - Method 2 =0 Methodi - Method3=0 Enterprise cash flow + Financing cash flow = 0 Income statement Sales COGS SG&A = Operating income Interest income Interest expense Eamings before tax Tax expense = Net Income Depreciation in COGS and SG&A Ending balance sheet Cash needed for liquidity - Current financial assets Current receivables Inventories = Current operating assets = Current assets Non-current financial assets Long-term receivables PPBE, net - Non-current operating assets = Non-current assets = Total assets Note payable to the banks = Current financial liabilities Accounts payable to suppliers Current deferred revenue Salary payable = Current operating liabilities = Current liabilities Long-term debt = Non-current financial liabilities Long-term deferred revenue Long-term accrued warranties -Non-current operating liabilities = Non-current liabilities = Total liabilities 671.00 782.00 671.00 782.00 2781.00 3451.00 4621.00 4921.00 7402.00 8372.00 8073.00 9154.00 0.00 0.00 1498.00 1792.00 6400.00 7900.00 7898.00 9692.00 7898.00 9692.00 15971.00 18846.00 719.00 219.00 719.00 219.00 1976.00 2319.00 1231.00 1345.00 612.00 692.00 3819.00 4356.00 4538.00 4575.00 6534.00 5241.00 6534.00 5241.00 987.00 1029.00 1820.00 1400.00 2807.00 2429.00 9341.00 7670.00 13879.00 12245.00 2000.00 6500.00 92.00 101.00 2092.00 6601.00 15971.00 18846.00 0.00 0.00 0.00 0.00 0.00 0.001 0.00 0.00 Paid-in capital Retained earnings = Total equity = Total liabilities + Total equity Balance sheet metrics Not useful Working capital: Current assets - Current liabilities Need for invested capital Current operating assets - Current operating liabilities = Current net operating assets or the need for operating working capital + Non-current operating assets - Non-current operating liabilities = Non-current net operating assets or the need for fixed capital = Net operating assets or the need for invested capital Source of invested capital Financial liabilities Less Financial assets = Net financial liabilities or net debt Equity = Invested capital Indirect GAAP cash flows Net income + Depreciation and amortization Change in operating working capital - Change in non-current operating assets other than PP&E and intangibles + Change in non-current operating liabilities = OCF -Capex -Change in S.T. Investments = ICF Change in principal portion of debt Change in capital (Dividends) = FCF = NCF Enterprise free cash flows Enterprise free cash flow: Method 1 Operating income after tax; NOPAT; EBIAT; EBIT*(1-tax); Unlevered or prefinancing net income - Change in net operating assets = Unlevered or enterprise free cash flow 0.001 0.00 0.00 0.00 0.00 0.00 0.00 Enterprise free cash flow: Method 2 Operating income after tax; NOPAT; EBIAT; EBIT*(1-tax); Unlevered or prefinancing net income + Depreciation and amortization Change in operating working capital - Change in non-current operating assets other than PP&E and intangibles + Change in non-current operating liabilities = OCF without interest Capex = Unlevered or enterprise free cash flow Enterprise free cash flow: Method 3 EBIT + Depreciation and amortization = EBITDA - Tax on EBIT Change in operating working capital - Change in non-current operating assets other than PP&E and intangibles + Change in non-current operating liabilities = OCF without interest Capex = Unlevered or enterprise free cash flow Recasted cash flow statement Enterprise activities Reported OCF Interest paid, after tax Interest (received), after tax = Unlevered OCF, i.e., OCF without interest Reported ICF Increase (decrease in investments of excess cash = Unlevered ICF = (Capex) = Unlevered or enterprise free cash flow Financial activities Interest (paid) net of tax benefit Principal borrowed (repaid) from financing cash flows A= (Payments) to debtholders Capital received (distributed) from financing cash flows Dividends (paid) from financing cash flows B= (Payments) to shareholders Interest received net of taxes paid (increase) decrease in investments of excess cash (increase) decrease in cash needed for liquidity C= (Change) in financial assets = Financial cash flows 0.00 0.00 0.00 0.00 0.00 0.00 0.00 YEAR 2 Unlevered Free Cash Flows Working capital Current operating assets [No - before the number.] Current operating liabilities [No - before the number.] Operating working capital Non-current operating assets [No - before the number.] Non-current operating liabilities [No - before the number.] Net operating assets Net debt Invested capital GAAP Operating Cash Flow GAAP Investing Cash Flow OPAT or EBIT*(1-tax) CapEx [Put - before the number.] Unlevered or enterprise free cash flow