FCFF= NI + DA - changes in WAC - net capex + interest expense (1-t) + preferred dividends
= CFO - net capex + interest expense (1-t)
It says like this on the materials:
“CFO represents operating activities under US GAAP or IFRS where a company choose interest paid under operating activities (1). If interest paid was under financing activities (2), then CFO does not need to be adjusted for interest expense (1-t). Under IFRS if the company has placed interest and dividends received in investing activities (3), these should be added back to CFO to determine FCFF. Additionally, if dividends paid were subtracted in the operating section, these should be added back to FCFF.” Page 303 level 1, 2017, CFA
So basically, by reading this, we should conclude that under IFRS this, RIGHT?
interest received + dividends received (CFO section) --> NO CHANGE to CFO
(3) interest received + dividends received (CFI section) --> add them to CFO
(1) interest payed + dividends payed (CFO section) --> add them to CFO
(2) interest payed + dividends payed (CFF section) --> NO CHANGE to CFO
RIGHT?
ALSO, dividends are preffered dividends or common and preferred dividends.
Thank you