4.4.1. Example Discounted Cash Flow Analysis
This section provides a step-by-step example of a DCF analysis for Bunyan’s Cut, a hypothetical forest products company.
Step 1: Estimate future cash flow. In conducting a five-year FCFF projection for our sample company, Bunyan’s Cut, you are presented with the following data:
|
Bunyan’s Cut Historical Operating Data (in millions) |
|||
|
FY 2017 |
FY 2018 |
FY 2019 |
|
|
Revenue |
$350.00 |
$385.00 |
$420.00 |
|
% of growth |
---- |
10.00 |
9.10 |
|
EBITDA |
$80.50 |
$86.60 |
$92.40 |
|
Depreciation and Amortization |
7.00 |
7.7 |
8.4 |
|
EBIT |
$73.50 |
$78.90 |
$84.00 |
|
Less: Taxes (37%) |
27.2 |
29.2 |
31.1 |
|
Plus Depreciation and Amortization |
7.00 |
7.7 |
8.4 |
|
Less: Capex |
8.8 |
9.6 |
10.5 |
|
Less: Change in NWC |
---- |
4.0 |
3.8 |
|
Unlevered Free Cash Flow to the Firm (FCFF) |
---- |
$43.80 |
$47.00 |
|
Bunyan’s Cut Working Capita | |||