FCF to the Firm(FCFF) Models

FCF to the Firm(FCFF) Models Valuation: 중앙대학교 경영학부 박창헌 교수 FCFF Approach to Valuation 1 FCFE Approach to Valuation 2 Free Cash Flow to the Firm (FCFF): Concept Source: Damodaran (p.380) 3 Free Cash Flow to the Firm (FCFF): Concept Source: Damodaran (p.381) 4 Calculating FCFF from Net Income (e.g., depreciation expenses) (a.k.a., capex) (change in noncash working capital) 5 Calculating FCFF : Noncash Charges 6 Calculating FCFF: Fixed Capital Investment 7 Calculating FCFF: Fixed Capital Investment 8 Calculating FCFF: Fixed Capital Investment Or, FCInv = ending net PP&E – beginning net PP&E + depreciation = $3,500 - $2,950 + $300 = $850 Three-Stage FCFF Model: Samsung Electronic 94 94 Three-Stage FCFF Model: Samsung Electronic 95 95 Three-Stage FCFF Model: Samsung Electronic 96 96 Three-Stage FCFF Model: Samsung Electronic 97 97 Three-Stage FCFF Model: Samsung Electronic 98 98 Three-Stage FCFF Model: Samsung Electronic 99 99 Three-Stage FCFF Model: Samsung Electronic 100 100 Three-Stage FCFF Model: Samsung Electronic 101 101 Three-Stage FCFF Model: Samsung Electronic 102 102 Will Equity Value Be the Same under Firm and Equity Valuation? Source: Damodaran (pp 396-397) 103 Will Equity Value Be the Same under Firm and Equity Valuation? 104 104 Will Equity Value Be the Same under Firm and Equity Valuation? 105 105 Will Equity Value Be the Same under Firm and Equity Valuation? 106 106 Conclusion Source: Damodaran (p 419) 107 107 This work is protected by copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permitted The work and materials from it should never be made available to students except by instructors using the accompanying texts published by Kaplan, Wiley, McGraw-Hill, etc in their classes All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials ! 108 108 [...]... 20 *Calculating FCFE from NI or CFO 21 21 Calculating FCFF and FCFE (recap) 22 22 Calculating FCFF and FCFE: Example 23 Calculating FCFF and FCFE: Example 24 24 Calculating FCFF and FCFE: Example 25 25 Calculating FCFF and FCFE: Example 26 26 Calculating FCFF and FCFE: Example 27 Calculating FCFF and FCFE: Example 28 28 Calculating FCFF and FCFE: Example 29 29 Calculating FCFF and FCFE: Example 30...Calculating FCFF: Fixed Capital Investment 10 Calculating FCFF: Fixed Capital Investment 11 Calculating FCFF: Working Capital Investment 12 Calculating FCFF: Interest Expense 13 Calculating FCFF Using the S/CF 14 Calculating FCFF Using the S/CF 15 Calculating FCFF from EBIT 16 16 Calculating FCFF from EBIT 17 17 Calculating FCFF from EBITDA 18 18 Calculating FCFF from CFO 19 19 *Calculating FCFE from FCFF... Calculating FCFF and FCFE: Example 30 30 Free Cash Flows :Uses and Sources 31 31 EBITDA Is a Poor Proxy for FCFF 32 32 FCFF : Comparison to Other Measures Source: Damodaran (p.382) Continued on next slide 33 33 FCFF : Comparison to Other Measures Source: Damodaran (p.382) 34 34 Estimating Growth in FCFF Rate Source: Damodaran (p.381) Continued on next slide 35 35