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Fixed Capital Investment vs CFI

Question regarding the Fixed Captial Investment (FC Inv) used to calculate free cash flow to equity.

So if Fixed Capital Investment = cash spent on fixed assets - cash received from sale of fixed assets, isn’t this pretty much identical to Cash Flow from Investing (except the sign will be negative since CFI = cash from sale from fixed assets - cash used in purchase of fixed assets)

So does Fixed capital investment = - CFI? Is this always the case or am I missing something (do they always equal)? Gains/losses on sales shouldn’t matter either right because both CFI and FCinv take into consideration these adjustments?

And since FCFE = CFO + Net Borrowing - FCinv,

does this mean FCFE = CFO + CFI + Net Borrowing?

long winded question but to summarize, does CFI always equal (-FC inv)?

Investing activities also include buying and selling stocks, bonds, and other investments, as well as the cash flows that come from those investments (e.g., dividends and interest).

No: CFI need not equal −FCInv.

Simplify the complicated side; don't complify the simplicated side.

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Dividends and interest received are not investing activities. They go under operating cash flows. Only the principal portion goes under investing. 

Cash is a fact, profit is an opinion

solebreadwinner wrote:
Dividends and interest received are not investing activities. They go under operating cash flows. Only the principal portion goes under investing.

Under IFRS dividends and interest received may be classified as CFO or CFI.

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/

Correct.

Cash is a fact, profit is an opinion

Hello,

CFI can contain other things than just sold and purchased fixed assets. For example, dividends and interest received under IFRS as already mentioned. Also, investments in affiliates are CFI outflows for the acquiring company. Other examples can be the finance lease principal for a lessor…

So FCinv is certainly a part of CFI, but does not necessary equals to it.

Hope this helps.

Others have pretty much told you the answer. FCInv is just an item that helps make up FCI.

thanks once again! I don’t know why but I just saw this

My pleasure.

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/