Step-by-step to find the correct Free Cashflow (Working Post)

This one is easy, but some weird lines on the Income Statement and in the Balance Sheet can create some doubts. I'll write down here the basic steps. When we find out the problems in real life we can discuss in this topic.

The free cash flow to the firm is composed of 3 components: operational cash flow, investments in working capital, capital expenses (CAPEX).

1) Operational Cash Flow

The Operational Cash Flow can be easily assessed from the Income Statement. However no all the lines of this statement are used. We will check later what was missing!

+ Revenues
- Cost of Sales
= Gross Profit
- Overhead
= EBITDA
- Depreciation and Amortization
= EBIT
- Taxes
= Operational Cash Flow

It's missing XXXXX??????????????

2) Investment in Working Capital

The Investment in Working Capital is based mainly on assumptions over the cash conversion periods (inventory, receivables and payables). After this assumptions are made, almost all the work is done.

The debate here is about the operational cash needed and the short term debt. The premises for them can be made based on a percentage of sales, for the former and cost of sales, for the latter, as an example. After knowing the cash and the short term debt needed, the result of the extra cash and debt (non-operational cash and short term debt) should be netted and added / subtracted to the needed working capital on the period 0, consequently, increasing / decreasing, the value of the company exactly in that amount.

3) CAPEX
The investments plan must be carefully analysed as it can have a big impact, principally in companies with a high operational leverage. If there is a forecast of growing revenues, the capex mut, a least, cover the depreciation expenses.

It should be excluded from the valuation the investments in future projects. Future project shouldn't take part on the valuation, either the costs as well as the revenues. The value os these future projects is equal the value of the options manager have of realizing or not these projects. They should be included on the final value of the company, but now mixed together with the DCF valuation. A solution is real options valuation.

This makes us remind that companies with investment cycles in development and marketing of new projects should have their cash flows forecast up to the life of the actual cycle. (Why? More comments here...)
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General rules:

1) Years to be forecasted: related to one cycle of investments or up to the stabilization of the cash flows.
2) Terminal value: This is a new topic for this blog.
Anything else???