What is a 'DebtAdjusted Cash Flow  DACF'
A debtadjusted cash flow (DACF) is a financial ratio commonly used in the analysis of oil companies, representing the aftertax operating cash flow, excluding financial expenses after taxes.
Debtadjusted cash flow (DACF) is calculated as follows:
DACF = cash flow from operations + financing costs (after tax) + exploration expenses (before tax) +/ working capital adjustment
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BREAKING DOWN 'DebtAdjusted Cash Flow  DACF'
DACF is often used in the financial ratio EV/DACF, where EV is the enterprise value of the company being analyzed. This ratio is used in place of EV/EBITDA as a valuation ratio. This ratio is good for use in the oil industry because it is an aftertax calculation (good for an industry with high resource taxes) and independent of companies' financing decisions.
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