Confused about a question in the Q Bank (part of the SS#12 Session Test). It’s regarding calculating the WCInv. The problem states: Throughout the high-growth and transitional growth periods, you expect the company to be able to limit increases in the investment in working capital to 20 cents per year. In her analysis, the investment in working capital will peak in 2010, declining a dime to $2.10 per share in 2011. It gives you all the other inputs that you need and then asks for FCFE in 2011. My question is, why is WCInv 2.10 in that year? Isn’t the WCInv the change from year to year? I used a value of -.10 for 2011, and it was incorrect. Can anyone explain? Thanks
It declined a dime to 2.10 per share in 2011, question says. So the value is 2.10 in that year. and the change in the WCInv was -0.10. CP