1) how to calculate fcf, ebitda, adjusted ebitda? 2) how to fund fcf deficit? 3) how to adjust debt for off balance sheet leases?

Question

Accepted Answer

Calculating FCF, EBITDA, adjusted EBITDA, funding FCF deficit, and adjusting debt for off balance sheet leases in research analysis.

To calculate Free Cash Flow (FCF), subtract capital expenditures from operating cash flow.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is calculated by adding back interest, taxes, depreciation, and amortization to net income.
Adjusted EBITDA is EBITDA adjusted for non-recurring expenses, gains, or losses.
To fund FCF deficit, options include raising debt, issuing equity, or selling assets.
To adjust debt for off balance sheet leases, calculate the present value of lease payments and add it to the reported debt.
Example: FCF = Operating Cash Flow - Capital Expenditures
Example: EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization
Example: Adjusted EBITDA = EBITDA + Non-recurring Expenses - Non-recurring Gains

Top Crisil Research Analyst interview questions & answers