CFAI uses Total Liabilities in the numerator (82,854), not Total Debt as specified in the formula. Why? Seems wrong. Total Debt should be Long-term debt + short-term debt + current portion of long-term debt = 36,368 Can anyone clarify this for me? Btw, the denominator was also tricky vis-a-vis the text which does not equate CFO (from the cash-flow statement) with S&P’s “operating cash flow” line (p 176). If you try to use the methodology used in the text instead, i.e. by way of the income-statement and balance-sheet, you do not wind up near the CFO number. Yet, just like we see in the variants of the FCFF formulae in the Equity book, these two approaches can yield variant results depending on the construction of the financials. Certainly it makes sense that CFO from the cash-flow statement should be the best source by which to undergird such free-cash-flow calculations, since it is where the rubber best meets the road in assessing cash, working-capital cash in this case. So now, for anyone interested, here are the S&P formulae I developed for memorization (see p. 176): FFO = NI + NCC + Delta(DT) OCF = FFO - WCinv << and now, easier, just use CFO if available! >> FOCF = OCF - FCinv DiscCF = FOCF - Div