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Pascal PIERRE edited section_Building_a_Profitability_Valuation__.tex
almost 8 years ago
Commit id: 8ff793457d926d125523e25a936e75e1ed442c3e
deletions | additions
diff --git a/section_Building_a_Profitability_Valuation__.tex b/section_Building_a_Profitability_Valuation__.tex
index 246d7bb..97093ea 100644
--- a/section_Building_a_Profitability_Valuation__.tex
+++ b/section_Building_a_Profitability_Valuation__.tex
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\begin{equation}
A_{t}=NOPAT_{t}-WACC \times IC_{t-1}
\end{equation}
where $A_{t}$ are the abnormal operating earnings and $WACC$ the Weighted Average Cost of Capital.
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By combining Eq. 10 and Eq. 12, we get :
\begin{equation}
IC_{t}=IC_{t-1}+NOPAT_{t}-FCFF_{t}
\end{equation}
And by replacing $NOPAT$ by its equivalent in Eq.13 we get :
\begin{equation}
IC_{t}=IC_{t-1}+A_{t}+WACC \times IC_{t-1}-FCFF_{t}
\end{equation}
Which gives :
\begin{equation}
IC_{t}=IC_{t-1}(1+WACC)+A_{t}-FCFF_{t}
\end{equation}
And $FCFF$ is thus equal to :
\begin{equation}
FCFF_{t}=IC_{t-1}(1+WACC)+A_{t}-IC_{t}
\end{equation}.
