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Free Cash Flow Valuation Case Study

The document outlines the Free Cash Flow (FCF) method for firm valuation, detailing calculations for Net Operating Profit (NOP), Net Fixed Assets (NFA/netPPE), and Net Operating Working Capital (NOWC). It provides formulas and examples for determining changes in these financial metrics. The content is part of a Corporate Finance Professional Certificate MOOC, specifically focusing on a valuation case study.

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Plinio Tavares
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7 views1 page

Free Cash Flow Valuation Case Study

The document outlines the Free Cash Flow (FCF) method for firm valuation, detailing calculations for Net Operating Profit (NOP), Net Fixed Assets (NFA/netPPE), and Net Operating Working Capital (NOWC). It provides formulas and examples for determining changes in these financial metrics. The content is part of a Corporate Finance Professional Certificate MOOC, specifically focusing on a valuation case study.

Uploaded by

Plinio Tavares
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Corporate Finance Professional Certificate MOOC

Course 2, The Free Cash Flow Method for Firm Valuation


Module 5, Valuation Case Study
!"! = $%& − ∆$!* − ∆$%+"

FCF = Free Cash Flows


NOP = Net Operating Profit
∆NFA/netPPE = Change in Net Fixed Assets
∆NOWC = Change in Net Operating Working Capital
Calculating NOP

,-./0 − 123, − 24 564/70/0 − 8-6/0 97 5:;8


Calculating NFA/netPPE

∆7/<==5 = 7/<==5> − 7/<==5>?@


-or-
∆7/<==5 = 1-4/6 − A/4B/CD-<D97

t = time period
Capex = Capital Expenditures
Calculating NOWC

E2F1 = 21G − 21H

NOWC = Net Operating Working Capital


OCA = Operating Current Assets
OCL = Operating Current Liabilities
Operating Current Assets (examples)
- Accounts Receivables
- Inventories
- Pre-paid expenses
Not Operating Current Assets (examples)
- Cash
- Marketable Securities
Operating Current Liabilites (examples)
- Accounts Payable
- Accrued Expenses
- Accrued Wages
- Deferred Revenues
Not an Operating Current Liability (examples)
- Short-Term Debt

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