Aswath Damodaran 498
Estimating FCFF in 2003 : Disney
! EBIT = $ 2 , 805 Million Tax rate = 37. 30 %
! Capital spending = $ 1 , 735 Million
! Depreciation = $ 1 , 254 Million
! Increase in Non-cash Working capital = $ 454 Million
! Estimating FCFF
EBIT * ( 1 - tax rate) $ 1 , 759 : 2805 ( 1 -. 373 )
- Net Capital Expenditures$ 481 : ( 1735 - 1254 )
- Change in Working Capital $ 454
Free Cashflow to Firm $ 824
! Total Reinvestment = Net Cap Ex + Change in WC = 481 + 454 = 935
! Reinvestment Rate = 935 / 1759 = 53. 18 %
The working capital change is rather large. We might need to normalize before
we start forecasting the cash flows.
