# CFAI free sample exam Working Capital

the last problem is FSA, the first one is to calculate FCFF how come they have the numbers for working capital, where did they get the number of 80 and 105? Thank you.

When you calculate the working capital, the general formula is (A/R1-A/R0)+(Inv1-Inv0)+(OtherCurr1-Other Curr0)-(CurrLiab1-CurrLiab0) So (413-417)+(709-638)+(136-123)=80 (2783-2678)=105

Thank you so much ya_ne_knut However, why exclude cash? I thought the definition of WC is current assets - current liabilities so I get 2006 WC as 1199-2678 = -1479 2007 WC = 1290 - 2783 = -1493 - 1493 - (- 1479) = -14 ya_ne_knut Wrote: ------------------------------------------------------- > When you calculate the working capital, the > general formula is > > (A/R1-A/R0)+(Inv1-Inv0)+(OtherCurr1-Other > Curr0)-(CurrLiab1-CurrLiab0) > > So (413-417)+(709-638)+(136-123)=80 > > (2783-2678)=105

no WCInv does not include Cash - because you are not investing in cash apparently, only in inventory etc

net working capital also does not include current portion of long term debt, and notes payable on the current liabilities side. and exclude cash & equivalents on the current asset side…

Thanks guys, the definition of current asset minus current liabilities screwed me up