easy · Investment Banking valuation-core

In a DCF, the 'Mid-Year Convention' is used to account for the fact that:

1. Tax payments owed to the IRS for operations are typically due in the month of July each year
2. Most of the company's large capital projects are typically planned and completed midway through its fiscal year
3. The company's fiscal year happens to end in June rather than December, unlike most of its industry peers
4. Cash flows are typically received throughout the year rather than in a single lump sum at year-end

Sign up free to see the explanation and track your rank →