Debt-Adjusted Cash Flow - DACF


DEFINITION of 'Debt-Adjusted Cash Flow - DACF'

A financial ratio commonly used in the analysis of oil companies, representing the after-tax operating cash flow, excluding financial expenses after taxes.

Debt-adjusted cash flow (DACF) is calculated as follows:

DACF = cash flow from operations + financing costs (after tax) + exploration expenses (before tax) +/- working capital adjustment

BREAKING DOWN 'Debt-Adjusted 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 after-tax calculation (good for an industry with high resource taxes) and independent of companies' financing decisions.

  1. Enterprise Value (EV)

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    An amount of money borrowed by one party from another. Many corporations/individuals ...
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    The systematic and comprehensive recording of financial transactions ...
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    The amount of profit that a company produces during a specific ...
  6. Financing

    The act of providing funds for business activities, making purchases ...
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  1. Do you discount working capital in net present value (NPV)?

    Net present value (NPV) calculations should include the discounted value of changes in working capital. This treatment of ... Read Full Answer >>
  2. How is working capital different from fixed capital?

    There are several key differences between working capital and fixed capital. Most importantly, these two forms of capital ... Read Full Answer >>
  3. How can working capital affect a company's finances?

    Working capital, or total current assets minus total current liabilities, can affect a company's longer-term investment effectiveness ... Read Full Answer >>
  4. What are working capital costs?

    Working capital costs (WCC) refer to the costs of maintaining daily operations at an organization. These costs take into ... Read Full Answer >>
  5. Do you include working capital in net present value (NPV)?

    Working capital is included in calculating the net present value (NPV) of a company. NPV is the difference between the present ... Read Full Answer >>
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