Net Cash Flow to Invested Capital refers to the cash flows available to pay out to equity holders (in the form of dividends) and debt investors (in the form of principal and interest) after funding operations of the business enterprise including necessary capital investments. The net cash flow to invested capital is computed as: Net income (after-tax) + Non-cash charges (e.g., depreciation, amortization, deferred revenue, deferred taxes) – Capital expenditures necessary to support projected operations – Additions (deletions) to net working capital necessary to support projected operations + Interest expense net of the tax benefit (because interest is tax- deductible) = Net cash flow to invested capital (after-tax) When discounting net cash flow to invested capital, the appropriate discount rate is the weighted average cost of capital (WACC). The net cash flow to invested capital is also referred to as Invested Capital Net Cash Flow. In business valuation analytical work, the net cash flow to invested capital is reviewed and adjustments made to ensure that the cash and cash balances which moves into the statement of financial position are appropriate and not overstated or understated.