Below is the proxy-model of potential future FCF:
FCF = Total Revenue - COGS - SG&A - D&A - NCEtaxable - Interest - δWC - Income Tax - CAPEX + Fixed Assets Sold |
δWC = δ (COGS - SG&A - CAPEX - Interest) · KWC |
D&A = CAPEX · KDA |
Interest = L · rL |
Income Tax = (Total Revenue - COGS - SG&A - D&A - NCEnon-taxable) · KTAX |
where
L | Loan-in |
|---|---|
rL | Loan interest annual rate (usually around 5%) |
KWC | WC to the Cash Expenses ratio (usually around 25% which corresponds to the 3-months budget) |
| KDA | D&A to CAPEX ratio (usually around 20% which corresponds to 5 years write-off) |
KTAX | Income Tax Rate (usually around 30%) |
Fixed Assets Sold | Proceeds from selling Fixed Assets |
NCEtaxable | taxable NCE |
NCEnon-taxable | non-taxable NCE, for example annual portion of the natural reserves depletion |
See also
Business / Business Administration / Financial Management / Financial Planning