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Valuation of shares - dcf approach

Vinay verma (CA FINAL STUDENT)     29 January 2019

Vinay verma
 72 points

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When we calculate change in working capital in DCF approach, whether we should take effect of change in cash/bank also in formula of (Current Assets - Current Liability) i.e. Change in Non cash working capital ? 


yasaswi gomes   14 June 2020

yasaswi gomes

 65 likes  1117 points

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@ Vinay

DCF is not used for working capital changes but used to find out Value in use and investment appraisal. Operating Cashflows use working capital changes to find out the increase/decrease value. Only receivables, payables and inventory are considered. After calculating all of the three cashflow activities, the net momentum of cash and equivalent shares consider bank and cash. 

Non cash charges is depreciation and unrealised profits. There is no other non cash working capital defined in IndAS 1. Non GAAP measures are not there.

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