![]() Then, add back D&A, factor in Deferred Taxes, any other recurring operating activities, and the Change in Working Capital, and subtract CapEx: To calculate UFCF, start with Revenue and subtract COGS, OpEx, and Taxes (which are now different since they’re based on Operating Income). This list means that you ignore almost everything else: Net Interest Expense, Other Income / (Expense), most non-cash adjustments, most of the Cash Flow from Investing section, and the Cash Flow from Financing section.įor Walmart, many of the items in UFCF are simple $ per square foot figures: *Depreciation & Amortization gets a bit more complicated, especially if you’re analyzing a company that follows IFRS (see the next section). Depreciation & Amortization and sometimes other non-cash adjustments*.While there are many types of “Free Cash Flow,” in a standard DCF model, you almost always use Unlevered Free Cash Flow (UFCF), also known as Free Cash Flow to Firm (FCFF), because it produces the most consistent results and does not depend on the company’s capital structure. ![]() DCF Model, Step 1: Unlevered Free Cash Flow Its annual filing repeatedly cited its total square feet, so we made the total retail square feet the top-line driver and based other numbers on $ per square foot figures. We recommend reading through the annual report and investor presentation to the extent that you can come up with those 5-10 key drivers.įor Walmart, we came up with the following: ![]() In theory, you could spend days, weeks, or months on industry and company research, but that much effort is not necessary. You could also search for industry data from companies like IDC, Gartner, and Forrester, but it’s not necessary for a quick analysis of a mature company.Īnd if you are dealing with a rapidly changing company or a tech startup (e.g., Uber or Snap), it’s often more useful to get KPIs and financial stats from similar companies that were once growing quickly but have since matured. The company’s annual report and investor presentations are the best starting points.
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