To calculate Gross Cash Flow, D&A is added to NOPAT. When calculating changes in Capex, the difference in PP&E is taken into account, but D&A is also added back. Doesn’t this result in double-counting D&A, or am I missing something here?

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18 Nov 2024

Question on D&A in Gross Cash Flow and Capex Changes

in Discounted Cash Flow Valuation / Calculating Unlevered Free Cash Flow

To calculate Gross Cash Flow, D&A is added to NOPAT. When calculating changes in Capex, the difference in PP&E is taken into account, but D&A is also added back. Doesn’t this result in double-counting D&A, or am I missing something here?

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