Gross Cash Flow is NOPLAT adjusted for depreciation and amortization.
D&A is a non-cash ‘expense’; therefore, to calculate cash flow, you need to
add it back together to your operating system, already adjusted for taxes.
Obviously, you need to maximize your Gross Cash Flow, which requires
maximization of sales and optimization
of expenses. In other words, you need to be careful not to cut ‘meat’ with the ‘fat’.
Therefore, you must differentiate between investments
and waste when analyzing your
expenses.
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