# Chapter 3 - Additional Formulas - AP=Accounts payable Accr...

This preview shows pages 1–2. Sign up to view the full content.

Chapter 3 – Additional Formulas MACRS Depreciation if AcD t = Accumulated Depreciation in year t BV t = Book value of any asset in year t To calculate the annual MACRS depreciation multiply the initial cost by the corresponding MACRS rate for that year AcD t = sum of all annual depreciation amounts up to and including year t. BV t = initial cost – AcD t Free Cash Flow (FCF) The subscript END denotes the most recent year while the subscript BEG denotes the year before the END year. For example for the years 2006 and 2007 the END year will be 2007 and the BEG year will be 2006 if NFA=Net Fixed Assets; GFA=Gross Fixed Assets CA=Current Assets

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: AP=Accounts payable Accr. = Accruals Depr. = Depreciation OCF=Operating Cash Flows NFAI=Net Fixed Asset Investment NCAI=Net Current Assets Investment FCF = Free Cash Flow EBIT= Earnings Before Interest Tax otherwise known as operating profits NOPAT= Net Operating Profits After Tax then NOPAT = EBIT*(1 – T) OCF = EBIT*(1 – T) + Depr.= NOPAT + Depr. NFAI = NFA END – NFA BEG + Depr. = GFA END- GFA BEG NCAI = (CA END – CA BEG ) – ((AP END + Accr. END ) - (AP BEG +Accr. BEG )) Please note that the same formula can be re-arranged in many ways, they will all give you the same result....
View Full Document

{[ snackBarMessage ]}

### Page1 / 2

Chapter 3 - Additional Formulas - AP=Accounts payable Accr...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online