Mastering Financial Analysis: How to Calculate and Utilize CFAT Cash Flow After Taxes

Handling cash and cash flow after taxes.
Photo by Alexander Grey on Unsplash

Understanding CFAT

Calculating CFAT cash flow

  1. 1. Determine the cash flow before taxes.
  2. 2. Subtract the income tax liability, state and federal.
  3. The result is the Cash Flow After Taxes.
  4. Another method of calculating CFAT is:
  5. CFAT = Net Income + Depreciation + Amortization + Other Non-Cash Charges
  6. They really aren’t that different, as you’re just adding back cash items that were subtracted for the Cash Flow Before Taxes calculation. In the CFBT calculation, debt service is subtracted from Net Income, as it’s a cash outflow. However, the depreciation and interest are both deductible for taxes, and thus are added back to get the CFAT.

Analyzing CFAT

Implementing CFAT cash flow analysis

Closing Remarks

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