1. Calculating UFCF Overview
So again, at this point, you should have downloaded the Business Valuation
Model template that we're going to work through together. This is a different
file from the Exercises template. Okay, so let's move over to the DCF
Model tab. And again, we have our three financial statements stacked on
top of one another. Let's just go ahead and hide those.
We really don't need them. We included them again
just so that you can see where a lot of the DCF
numbers come from. So we have the three, in our statement, grouped. We'd
see that on the left hand side of Excel. And if we want
to collapse the grouping, we do Alt A+H that hides the Income Statement.
We'll do the same thing with the Cash Flow Statement, Alt A+H,
and then the Balance Sheet as well, Alt A+H. And now we're down
at the point where we can start talking about and calculating our unlevered
free cash flows. So we've covered three different ways to calculate unlevered
free cash flows. We can scroll down and we have a section for
each methodology, starting at EBIT earnings before interest and taxes,
starting at net income and unlevered free cash flow using EBITDA.
Up above here, we have Excerpts Provided from the Financial Statements.
So we have everything we need here in these Excerpts Provided from the
Financial Statements to calculate the unlevered free cash flows using the
three different methods that we discussed in our presentation.
At this point, please do your best, calculate unlevered free cash flow
using all three methodologies, then we'll come back
and we'll do it together. Remember though, regardless of which method you
use, the unlevered free cash flows should all be the same.
2. Let's practice!