Why don't we deduct tax from EBIT to derive FCFF?

CFA Level II Equities
#1

So while deriving FCFF equation from EBIT, we replace Net income in the original equation with [EBIT - Int exp](1 - tax) because Net income is the result of EBIT - Int exp - Tax. But why isn’t tax subtracted in the equation above?

#2

There is the tax deduction. You are calculating EBT after tax.

#3

oh ok thanks a lot. That was concise and helpful :+1: