Taxes are involved with the calculations for a firm’s operating cash flow, and operating cash flow after taxes is an important metric to investors interested in a corporation’s ability to pay ...

Calculating discretionary cash flow To calculate discretionary cash flow, start with the company's pre-tax earnings. Next, add back in all non-operating expenses and subtract non-operating income.

Divide the cash flow in the next year from Step 3 by your Step 4 result to calculate the residual value. Concluding the example, divide $51,000 by 0.08 to get a $637,500 residual value.

Discounted cash flow analysis Some economists think that discounted cash flow (DCF) analysis is the best way to calculate the intrinsic value of a stock.