Operating cash inflows is a second variable that we must take into account when determining cash flows from the project. It refers to incremental (additional) cash inflows over the duration of the project. The cash inflows do not take into account interest payments and are calculated as follows:
Revenue
LESS: Expenses (excluding depreciation and interest
= EBDIT (Earnings before depreciation, interest and taxes)
LESS: Depreciation
= EBIT (Earnings before interest and tax)
LESS: Taxes
= NOPAT (Net operating profit after taxes)
ADD: Depreciation
= OPERATING CASH INFLOWS
