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Was going through M&A in the topic Corporate Finance, and here's the formula to calculate the FCF.
+ Net interest after tax
= Unlevered NI
+/- change in deferred taxes
= Net operating profit less adjusted taxes (NOPLAT)
+/- change in net WC
My question is to do with the change in deferred taxes, from what I understand you would have to add deferred tax liabilities and deduct deferred tax asset.
However, in schweser notes example (Book 2, p355), change in deferred taxes were given as $17, $19,..... for each year. Since it's a positive figure, I would imagine that you would have to deduct it, but the book adds it back. Does anybody know why?