Amit, I will revisit the video to figure out were the confusion is and get back to you today.

ok sir check the above explanation and then see that last quiz question then come to conclusion which of those three option is right as per my explanation above third one is right that is you need not to touch d&a for dcf calculation when starting with ebitda

Amit. The video is correct and the quiz question is a little misleading. The option "D&A should be subtracted from EBITDA" basically indicates what is done in the video were we start with EBIT (hence D&A is already subtracted from EBITDA) to show the unlevered net income.

Fundamentally this is how you calculate Unlevered FCF (UFCF)
1. Start with Earnings before interest and taxes (EBIT) x (1-Tax Rate)
2. Add back any dep/amortization (non cash expenses)
3. Subtract any changes in NWC (CA-CL)
4. Subtract any capex
5. Arrive at FCF

Now you will notice that the tax amount is applicable to EBIT and not EBITDA. Thats why first we start with EBIT (without the DA), then apply the tax rate to the EBIT, then add back D&A to reflect UFCF.

Unlike what you said in your answer, you cant just start with EBITDA (just because you are adding D&A back). If you start with EBITDA then the effective tax amount (lets say 30% of EBITDA) is different from the correct tax amount (30% of EBIT). So we start with EBIT, then apply the tax rate on this amount, then add back D&A.

Is this explanation helpful?

sir now i agree with your explanation, yes in my explanation i forgot to mention of tax part( though i knew that), thanx for reply