Accounting & the 3 Statements
Does a goodwill impairment affect a DCF or an LBO valuation? Why or why not?
Model answer
No — directly, it does not. Goodwill impairment is a NON-CASH accounting charge; it doesn't change the actual cash the business generates. A DCF runs on unlevered free cash flow (EBIT × (1−t) + D&A −…
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