Module VI· DCF Model BuildAdvanced
Question
How do you integrate tax loss carryforwards into the UFCF forecast?
Answer
Track opening NOL balance, taxable income, NOL usage, and ending NOL. Cash taxes equal taxable income after NOL usage times tax rate, subject to jurisdiction limits. In UFCF, use cash taxes rather than simple EBIT tax if NOLs are material. DTA accounting is secondary to cash tax savings in valuation.