With reference to estimated cash flow for calculating Value in use, I faced a projected cash flow (i just extract one year for consideration) as follows:
Entity operation: manufacture clothes.
FY 2014 (mil)
Revenue: (1) 700
Cost of good sold: (2) 400
Gross margin: (3) 300
Change in working capital: (4) 0
Cost to maintain PP&E: (5) 50
Depreciation and amortisation: (6) 100
Net cash flow: (3)-(4)+(5) 350
What is wrong with above estimated cash flow?
I wonder whether or not the cash flow should include salary of administrative employees, advertising expense, stationary expense and other outside service other than maintenance expense (these expense is out of COGS, just included in G&A expense and selling expense)?