The example is from page 412 in Equity, question 13a. I am trying to compute the FCFE. Net Income is given: 80 Depreciation is given: 23 FCI: it gets a little tricky here because when I see PPE, I immediately think FCI. However, in this case, FCI is clearly marked: “Capital Expenditures.” WCI: this is what I am trying to compute. PLEASE HELP ME! The answer is 41, but I have no idea how they computed it. Thanks to all those who help. Rhythm
WCI = Change in (Current Assets - Current Liabs) = (326-201) - (141-57) = 125 - 84 = 41
CPK you are a stud - thank you very much!
In Shweser Q bank, the FCInv calculation is FCInv = (PPE(current yr) - Accum Dep(current yr)) - (PPE(previous)-Accum Dep (previous)) Can we simplify to : FCInv = PPE(current) - PPE(previous) the difference will the FCInv for that year???
Capex is simply the change in gross PPE y-o-y, or change in net PPE plus depreciation in the current yr.
For WCInv- I go with CFA calculation rules: 1. Liabilities- if up-> add if down->subtract 2. Assets - reverse the liabilities rule above 3. add depreciation/Deferred tax liabilities 4. add loss/subtract gain