Corporate Finance TT - England Q #1

Hey all,

For this question (#1 on Corp Finance - England) Why do they not subtract additional net working capital for the year when they calculate operating cash flow after tax?


They’re asking for the year’s after-tax operating cash flow. The additional net working capital for the year is considered an additional investment outlay that is recuperated at the end of the project’s life.

Thanks for your response. Hmm… I see what you’re saying but that additional NWC seems to be required in that specific year. Which is an operating cash outflow for that year, no?

Think back to the formula used to calculated after-tax operating cash flows: where in it do you see net working capital investments?

Good call. I am thinking of CFO which is different from operating cash flow.

CFO includes net working capital whereas operating cash flow does not.

Thanks again.

Is CFO different from operating cash flow(OCF)? I believe they are the same…