can someone pls clear this the !@#$ up! i think schweser fucked this oen up quite niceley $WACC = WACC* (total capital or invested capita) where total capital= assets = liabilities + equity invested capital = net working capital + net PPE = shareholders equty + long term debt 1luv
I remeber in the book total capital used…
yes but in the cheat sheet invested capital is used
CFAI question used invested capital. For me I just use total assets - non interest bearing debt.
For $WACC CFA uses invested capital with the equation you referenced.
i think it should be invested capital //there is no point in including short term liabilities, invested capital = LTD + Equity
shall we include short term debt like notes payable?
not interest bearing.
I do think you are supposed to include the current portion of long term debt due as well
Isn’t it invested capital and isn’t the easiest calculation SE-LTD? Also it has to be IC because the EVA Spread is the EVA equation divided by IC as such: EVA = NOPAT - WACC*IC divide all by IC EVA Spread = ROC - WACC or EVA/IC = NOPAT/IC - WACC This is how I remember this one. Hope it helps.
jiao Wrote: ------------------------------------------------------- > shall we include short term debt like notes > payable? Invested Capital = Net Working Capital + Net PPE where Net Working Capital = Current Asset - Current Liability (Non-interest bearing only) In case we want to use the other formula then I think we need to include current portion of debt and notes payable into long term debt because: Current Asset - Current Liability (Non-interest bearing only) + Net PPE = Current portion of LT Debt + Notes payable + LT Debt + Equity
Copeland’s book stated the IC is equal to net WC+net PPE,which is also equal to LTD+E
^^ agree with kabhii… personally for me its easier to remember it as Invested Capital = Net Working Capital + Net PPE. where NWC = Current Assets - Current Liabilities (not including int.bearing)
Cant we just use invested capital = Total assets? Cant we just use invested capital = Total assets?
Yeah, I just used the Equity and Debt figures. As for NWC and Net PPE, Schweser included ‘cash’ in the NWC. I dunno why.