“A few hours with you and I learned more than I did in class all semester!
Really great. Thank you!” — Anthony G.
“My accounting tutor actually works with full cost accounting as a CPA. His application & real life examples are outstanding. Very logical descriptions of the material. Extremely helpful!” — Tom, NC
First, we must appreciate that there is a difference between depreciation and amortization cash flows as computed in the IRS code/tax books or those reported in the financial accounting/reporting books. Now we can discuss, which of these must be factored into our DCF valuation model.
If you had access to depreciation and amortization cash flows as computed in the IRS code/tax books or those reported in the financial accounting/reporting books choice, which one would you prefer to use?
How will your DCF model change if your company pays for acquisitions using cash, stock or both? The free cash flow of a company is lower if a company pays for acquisitions with cash. The free cash flow will be higher if it pays using stock.
We address its question here: “How does it matter if the company pays for acquisitions using cash, stock or both when estimating cash flows for a valuation?”
We looked at how to forecast the revenues of a company that has a history of acquisitions. But how do we forecast the revenues of a company that has a history of acquisitions?
We address this question on this page: “How are acquisition costs forecasted for a company that has a history of acquisitions?”
What are the basic requirements of building a DCF model? We discuss the Essential Ingredients of a DCF Valuation Model on this page.