Does WCInv include cash?

CFA Level II
#1

In FCFF you remove the change in WCInv. I thought WCInv was: current assets - current liabilities which would include cash But I missed an FCFF question on the Sample 2 exam because I included cash in my calculation. Can anyone please clarify?

#2

WCinv does not include cash (on the current asset side) or interest bearing current liabilities

#3

You don’t include cash. You only use current asset - current liabilities, if cash stays the same.

#4

Basically, WCinv = AR + Inventory - AP

#5

exclude cash, notes payable, current portion of LT debt… include everything else that would be in WC.

#6

McLeod81 Wrote: ------------------------------------------------------- > Basically, WCinv = AR + Inventory - AP In addition to AR & Inventory they also included “other current assets”. Just wanted to give you a heads up.

#7

Yeah, anything that’s not cash. Same with the liabilities (anything w/out interest)

#8

Never on the CFA, in real life… well no no need to confuse things.