Hello,

Please can somebody help with my question about calculating cash flows in different models? I am so confused!

Why do LBO models take EBITDA and then subtract CAPEX, tax etc. to get cash flow available for debt repayment

But DCF models use EBIT(1-t) and then add back D&A before subtracting CAPEX etc.

i.e. my question is why do you start with different things (EBITDA vs. tax affected EBIT) to get cashflows for different uses? Is it something to do with DCF cash flows being unlevered?

Any insight would be appreciated!

Thanks

those two ways are the same thing...