Earnings and Cash Flows: A Primer on Free Cash Flow
Musings on Markets
OCTOBER 25, 2022
Thus, we start with operating income or earnings before interest and taxes (EBIT) replacing net income. (I In the Microsoft FCFF calculation, this would imply replacing the effective tax rate of 13.83% with an average effective tax rate of 22%, using the 2017-2021 time period, which would lower free cash flows to the firm.
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