FC Investments and WC Investments in FCFF

CFA Level II
#1

Hi all,

Wondering if anyone has a brief explanation of diffferent components for FC investment and WC investment that we use in FCF. I have seen different ways to attain the answers, want to make sure I have them all down.

Thanks! J

#2

bump!

#3

Here’s what I’m going with:

FCI is:

Ending Gross PPE - Beginning Gross PPE, or;

Ending Net PPE - Beginning Net PPE + Depreciation Expense

FCI = Capex - Proceeds from sale of PPE

There’s another variant using CFI, but I don’t know it.

WCI:

Ending (Inventory + AR - AP - Deferred Taxes) - Beginning (Inventory + AR - AP - Deferred Taxes), or;

Ending (Current Assets - Cash - CL) - Beginning (CA - Cash - CL)

I may be wrong, but too late for that, that’s what is imprinted into my brain. Hey, you wouldn’t have an equivalent list for all the methods of impairment, would you?

Good Luck!

#4

Hey, I just ran across a flash card that said CFI and FCInv are the same thing. Don’t know if it’s right, but I think I made that card while watching Andrew Holmes’ video class.