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The way you calculate cash operating taxes is you start with reported income tax expense, subtract increase in deferred tax liability and add back tax subsidy on deductible non-operating expenses.

specialday(Joyce)

You have to subtract the increase in deferred tax liability from the reported income tax expense as the increase represents part of the reported income tax expense will be paid in future, thus actual cash taxes paid < reported income tax expense.

Tax subsidy on deductible non-operating expenses basically add back the tax effects of deductible non-operating expenses to the reported income tax expense. The calculation is total tax-deductible non-operating expenses x tax rate %. I'm not too familiar with this part, but I think non-operating expenses includes net interest expense and maybe some other restructuring charges.

(#309@52)
Last Updated: 2008-9-12

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Who is familiar with EVA calculation? Please see detail in Contents. -daydream123(梦驰CN); 2008-9-12 {247} (#297@52)
The formula basically takes net income after cash tax, less interest, plus a charge for capital investment.
Question: What items on Balance sheet is Capital investment? Only cash related or includes Asset invest too?

Please advise, thank you!

invested capital = debt + equity, cost of capital = WACC -specialday(Joyce); 2008-9-12 (#298@52)

Thank you, Joyce -daydream123(梦驰CN); 2008-9-12 (#304@52)
Hi Joyce, for Cash Tax, it said can be calculated by (A)deferred tax liability & (B)Tax subsidy on deductible expenses. Question: -daydream123(梦驰CN); 2008-9-12 {120} (#306@52)
(A) Deferred tax should be Asset, right? What is (B)? Tax paid by company or Tax Accrued in Liability? Please clarify.

The way you calculate cash operating taxes is you start with reported income tax expense, subtract increase in deferred tax liability and add back tax subsidy on deductible non-operating expenses. -specialday(Joyce); 2008-9-12 {632} (#309@52)
You have to subtract the increase in deferred tax liability from the reported income tax expense as the increase represents part of the reported income tax expense will be paid in future, thus actual cash taxes paid < reported income tax expense.

Tax subsidy on deductible non-operating expenses basically add back the tax effects of deductible non-operating expenses to the reported income tax expense. The calculation is total tax-deductible non-operating expenses x tax rate %. I'm not too familiar with this part, but I think non-operating expenses includes net interest expense and maybe some other restructuring charges.

Thank you very much for quick reply. I will follow your instruction. -daydream123(梦驰CN); 2008-9-12 (#312@52)

@Edmonton

The way you calculate cash operating taxes is you start with reported income tax expense, subtract increase in deferred tax liability and add back tax subsidy on deductible non-operating expenses.

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