Free Inv

Free Inv
DCF Valuation?

I am trying to calculate the free cash flow of a company for DCF analysis. I am having trouble calculating the Operating Expense. Coming from a non financial background, I am finding the information on web sites to be inconsistent. A sample that I got from businessweek for Dredging Corporation of India is given below:

Year: 2007

Tot Rev 5728.9
COGS 2870.4
Selling Genl & Admin Exp, Tot 373.2
Dep & Amor, Tot 365.8
Other Op Exp 560.6
OTHER OP EXP, TOT 1,299.6
Op Income 1,558.9
Interest Exp -21
Int and Inv Income 365.9
NET INTEREST EXP 345
Other Non-Op Income (Expenses) 154.9
EBT, INCLUDING UNUSUAL ITEMS 2,063.4
Op Margin 33.8

1. Op Cost = COGS + OTHER OP EXP, Tot - Dep & Amr, Tot
= 2870.4 + 1299.6
= 4170

2. Op Cost = Tot Rev - EBT
= 5728.9 - 2063.4
= 3665.5

2. Op Cost = (100 - Op Margin)/100 * Rev
= (100 - 33.8)/100 * 5728.9
= 3792.53

Would you please suggest as to which of the values can be used as the Operating Cost for the DCF analysis? Thanks.

first of all, it depends on whether you're trying to calculate debt-free cash flow, or free cash flow to equity.

but it gives you total operating expenses in the question. it's your SG&A plus Depr and Amor plus Other Operating Costs.

your operating income is the equivalenet to EBIT, since interest expense is a line item below Operating Income.

So your cash flow (on a debt free basis, which means you have to use WACC in the PV calc) is:

EBIT - Change in Net Working Capital - Capital Expenditures + Depreciation/Amort + other noncash charges.

I don't see CAPX or Working Capital info, so you would just add EBIT ($1,558.9) to Depre/Amort ($365.8) = $1,924.7

you should also remove the unusual items, which in this case are equal to $694.5, to normalize your cash flow. this is calculated by taking your operating income less net interest expenses plus other non-op, to get to your EBT. but it tells you that w/unusual items (in this case a gain), your ebt is $2,063.4. so the difference between actual EBT, which was around $1,3000 and the $2,063.4 must be added back to cash flow.

this results in gross adjusted cash flow of $2,619.3. Note: this is not the same as Free Cash Flow, b/c you've not accounted for CAPX or the change in working capital.

For More Free Inv Info Click On The Blue Links Below

Dynamics GP Ecommerce Programming and Integration Notes

Microsoft Dynamics GP is open to ecommerce programmer via eConnect SDK, as well as Microsoft SQL Server programmability tools (typically Stored Procedures and Views).  Before you dive into technical project of eConnect programming, please, review Great Plains Integration Manager module and its customization options: VBA scripting of Before Document Commit (as very common modification point) event; you can schedule IM integration with Windows Macro or deploy free and ready for purchase applications, extending basic Windows Macro with additional functionalities.  Dynamics GP Integration Manager based (for version 10.0 and future versions 11.0 and up) on eConnect technology (in addition to supporting old OLE Server integrations), meaning that IM integration should be able to achieve the same goal with less efforts.  And as you should expect the same limitations for eConnect as you have for Integration Manager - most often manifesting limitation is eConnect and Integration Manager Batch Posting inability.  Now straight to the Great Plains eCommerce Developing topic:

1. eConnect is Software Development Kit, written in SQL Stored Procedures (encrypted), it allows you to program GP master records (Customer, Vendor, Employee, GL Account, Inventory Item, Address, Project, Budget, etc.) and so-called Work Transactions: SOP Quote, Order and Invoice, POP Purchase Order, GL Transaction, Employee Paycheck, Inventory Adjustment and Transfer, to give the idea.  eConnect is friendly and requires very short learning curve for Microsoft Visual Studio .Net C#, VB and other .Net compliant languages programmers.  Additional pluses if you have XML, SQL Scripting skills

2. Sales Order Processing and Inventory Control modules and tables.  These two are the most popular in ecommerce integrations.  SOP tables have SOP prefix (famous SOP10100 transaction header and SOP10200 lines), and Inventory INV (INV00101 - item master and INV00102 Quantity master) respectively.  Sometimes, especially in old Great Plains ecommerce legacy integrations you find Invoicing module (IV prefix)

3. Posting problem.  In ecommerce application you often want to do all the way transaction processing: Sales Invoice creation and modification, applying credit card payment deposit, allocating merchandise, approving and posting Sales Order Processing batch (or individual transaction).  Here, you will hit the wall and realize that Posting functionality is not included in eConnect or Great Plains Integration Manager.  There is no shortcut here (we assume that you are Not Dynamics GP Dexterity software developer with tons of programming experience, including Dexterity Source Code Programming), you will need to purchase Dynamics GP Add-On, we recommend Dynamics GP Posting Server, also known as Autopost

4. Dynamics GP eCommerce SQL Scripting.  If you have the opinion that your ecommerce integration routine is very simple and eConnect is too cumbersome and heavy in being considered for deployment, you can always rescue to SQL direct insertion statement.  Please review GP table structure: Dynamics GP -> Settings -> Resource Description -> Tables.  Or, simply install GP Software Development Kit from CD #2.  Dynamics GP Business Logic might be too complex for intuitive programming, so if you will get the buggy situation, consider creating test transaction in GP user interface and review the records in GP tables.  If you prefer proven set of stored procedures - we offer them as Order Connector, feeding data into SOP tables

5. Feel free to call us on Microsoft Dynamics GP eCommerce integrations concerns: 1-866-528-0577, help@albaspectrum.com

About the Author

Andrew Karasev, Alba Spectrum, 1-866-528-0577, help@albaspectrum.com http://www.albaspectrum.com Please visit our info portal http://www.pegasplanet.com Serving Chicagoland and Northern Illinois customers in Chicago downtown, Naperville, Lisle, Schaumburg, Aurora, Joliet, Romeoville, Downers Grove, Plainfield, Evanston, Glenn Ellyn, Wheaton, Batavia, St. Charles, Elgin, Crystal Lake, Morris, Channahon, Kankakee, Lombard, Hinsdale, Des Plaines, Gary, Oak Park, Alsip, Lyons, plus San Diego, Houston and USA and Canada Nationwide via remote support

Many thanks for reading our Free Inv article

• Zoanthids Live Coral
• Water Pump Powerhead

Tagged with: free inv • open • ppl • sample inv.