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Financial Modeling
Unit 1
Discounted Cash Flow (DCF)
Understanding DCF Fundamentals
Calculating Free Cash Flows
Discount Rate and Terminal Value
Forecasting Cash Flows
Sensitivity Analysis and Valuation
Unit 2
LBO
Introduction to LBOs
LBO Modeling Process
LBO Valuation and Analysis
LBO Deal Structuring
LBO Case Studies
Unit 1 • Chapter 2
Calculating Free Cash Flows
Summary
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Concept Check
What is a key component when calculating Free Cash Flows?
Operating expenses
Interest payments
Dividend payments
Capital expenditures
Why are capital expenditures considered in Free Cash Flow calculation?
To pay off debt
To calculate EBIT
To account for asset investments
To manage inventory levels
What does Free Cash Flow represent for a company?
Accounts payable
Net profit
Amount of cash generated
Total revenue
How can a company increase its Free Cash Flows?
Increase dividend payments
Reduce sales volume
Increase debt levels
Decrease operating expenses
What impact does a decrease in capital expenditures have on Free Cash Flows?
Decreases Free Cash Flows
Increases EBIT
No impact
Increases Free Cash Flows
Check Answer
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Understanding DCF Fundamentals
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Discount Rate and Terminal Value