Hi Guys, Something confuse me sometimes - Is CFI equivalent to FCinv in FCFF? Thanks.
No- someone correct me if i’m wrong but I believe FCI has components of WCInv as well.
answer is no- but i forget what else goes into CFI…working capital stuff maybe…like…?
verse214 Wrote: ------------------------------------------------------- > No- someone correct me if i’m wrong but I believe > FCI has components of WCInv as well. Investment and changes in inventories, receivables, etc.
FCInv = Investment in Fixed Capital It is an estimation of CFI, and in most cases will not match dollar to dollar to CFI
Hi varang and alls, Would you mind give me a simple example how CFI not match to FCinv (dollar to dollar)? Any website link is also fine. Let’s say if CFI figure is given in the exam question, shall we use CFI as FCinv in FCFF calculation. So far, I notice that we are using ‘FCInv = End PP&E - Beginning PP&E’ in FCFF calculation. Thanks.
Im pretty sure CFI is NOT the same thing as FCInv. FCInv is part of CFI. Cash paid and receieved for purchases and disposals is cash flow from investing. However, CFI has other cash flows as well. For example, if you lease something (from the lessor’s perspective), interest payments are OCF, but principal repayments are CFI. I don’t think that would be included in FCInv. I think in general (going back to the LI days), if you invest in a debt security, return of principal is CFI, which again is not part of FCInv. Im sure there are many other examples, but i think these are two good ones. Please correct me if i am wrong/misunderstanding something.
ok I can confirm CFI does not equal FCINV, a few examples: - Financing Receivables - Proceeds from sales of discontinued operations - Other investment activities, i.e. buing a portfolio of equities for example In the whole CFAI curriculum it’s usually a simplified cashflow statement so I doubt we’ll see something other than FCINV
CFI - refers to cash flow in investing activities- They include investments in financial assest as well FCInv - fixed capital investments _ This refers to Capex only @spanishesk - I would think that principal repayments go into CFF - cash flow financing activities - Not sure what CFAI has to say about this but this is the general convention
I think principal repayments from a bond issuer to an investor are CFI (so if X invests in company Y bonds, principal payments from Y to X would be classified as FCF for company Y and CFI for company X). The investing company records inflow of CFI when its principal is returned and the bond issuing company records CFF outflow when principal payments are made. For LEssor, i am almost positive that interest payments receievd are OCF and principal payments received are CFI, while for a lessee interest payments made are OCF and principal payments made are FCF
shinki Wrote: ------------------------------------------------------- > Hi varang and alls, > > Would you mind give me a simple example how CFI > not match to FCinv (dollar to dollar)? Any website > link is also fine. > > Let’s say if CFI figure is given in the exam > question, shall we use CFI as FCinv in FCFF > calculation. So far, I notice that we are using > ‘FCInv = End PP&E - Beginning PP&E’ in FCFF > calculation. > > Thanks. Goto the EOC questions for Equity - FCF reading 43. 2nd problem - look at the statement of cash flows. Boom
CFI = net cash flow from investments (includes SALE OF ASSETS) FCInv = expenditures for NEW investments. just dont attempt to derive the FCinv through CFI, and dont ask me why.
happyen83 I am pretty sure FCInv also includes sale of assets.
Cash flow from investing includes purchases of fixed assets, disposal of fixed assets, investments and divestments… some other stuff can be included like intangibles, investment deposits.
Passme. its FCInv, not ‘net FCInv’. If you were to net, then FCInv should equal CFI
happyen83 Wrote: ------------------------------------------------------- > Passme. > > its FCInv, not ‘net FCInv’. If you were to net, > then FCInv should equal CFI +1