a friend showed me this one and got me confused, to find FCFE…
Net PPE 2008 = 3794
Net PPE 2009 = 4150
CFO = 1042
CFI = -648
CFF = -334
Net Borrowing = 94
In the official answer it says that FCInv = CFI
Is this always the case?
What question is this from?
To calculate FCFE starting with CFO
FCFE = CFO + Net Borrowing - CAPEX
Obviously CAPEX is not Explicitely stated if we had Gross PPE or depreciation we could easily figure it out, although you’ve given us neither directly. If you assume that the ONLY thing that was invested in was fixed assets in the form of purchases, then you could get CAPEX from that, although the CFAI is unlikely to make you assume anything.
FCFE = 1042 + 94 - 648 = 487
Edit: Corrected the typo where I had used the wrong number.
Why are you using CFF and not subtracting Capex?
I am assuming this is a typo? elcoelhon : Have they provided a complete breakdown of CFI, or just a single-line-consolidated CFI?
It was definitely a typo. The worded explanation was correct, but I pulled the wrong number. The original post has be edited to reflect the revision.
yes, that is the right answer, but in the explanation all they said was that capex = cfi
single line, I will try to get the paper with the question and scan it
Was this from a prep provider or the CFAI? Without some sort of qualifying statement you would be making a somewhat broad assumption. I would be surprised if the CFAI did something like this.