Negative Change In Working Capital - DCF

CFA Level I Equities
#1

I am doing a DCF right now, and got stuck when calculating FCFF. im not sure how to account for change in working capital

so heres the numbers:

after tax EBIT = 1000

dep/amortization = 10

change in working capital = -20

capex = 50

what is the proper FCFF?

1000 + 10 - (-20) - 50 = 980

or

1000 + 10 - 20 - 50 = 940

thank you appreciate the help!

#2

The former: +20.

#3

Thought so! Great, thank you!

#4

You’re welcome.