➢ NOA captures the present value of all the expected future cash flows generated from operating
assets that are available to distribute to debt- and equity-investors: “free cash flow to the firm”
(FCFF)
❖ The DCF model also gave us more insight into how our reformulated financial statements are
linked, because DCF takes its free cash flow inputs from the condensed income statement (NOPAT)
and consecutive condensed balance sheets (the change in NOA) FCFF = NOPAT – Change in NOA
3
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