Company Value Evaluation-free cash flow method

Free cash flow = net profit after interest and tax adjustment + Depreciation-New Capital Expenditure

New Capital expenditure = new capital expenditure for fixed assets + new capital expenditure for mobile capital

Continuous value of the company's stability stage = [noplat (1-g/roic1)]/(WACC-g)

Noplat: Net Operating Profit deducted from the Adjustment Tax (the first year after the forecast)

Roic1: new investment capital return rate

G: The expected sustainable growth rate of the company's profit after tax adjustment

WACC: weighted average capital cost

 

Free cash flow = non-commercial cash flow + business free cash flow

Overall Company Value = non-operating cash flowPresent Value+ Business free cash flowPresent Value

Business free cash flow = (after-tax operating profit + depreciation and amortization)-(operating capital increase + capital expenditure)

= After-tax operating profit-operating capitalNet increase-CapitalNet Expenditure

Increase in operating capital = (increase in monetary funds + increase in notes receivable + increase in receivables + increase in other receivables + increase in Prepayment + increase in inventory and amortization costs) -(increase in notes payable + increase in accounts payable + increase in Prepayment + increase in wages payable + increase in welfare payable + increase in payable taxes + increase in other payables and advance expenses)

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Solution steps:

1. Cash Flow Statement

1.1: net profit after tax

1.2: net investment (net increase of operating capital + net expenditure of capital)

2. Free Business cash flow: 1.1-1.2

3. Continuous value of the company

4. company value = CompanyContinuousValuePresent Value+ BusinessFreeCash FlowPresent Value