Free Cash Flow Question Mock 2011 n 2012

Okay on 2011 afternoon. Net invested in fixed capital was the difference between beginning and ending fix assets. However 2012 morning it’s the difference between beginning and ending fix assets plus depreciation. Also for net working capital for 2011 afternoon it was difference between current asset minus liability. However in 2012 it’s current asset excluding cash minis current liability. Also net borrowing in 2011 was difference in long term debt. (this year minus last year) minus difference in payable. I am super confuse here.

I’m also caught up a little in this nitty gritty issues concerning inconsistencies of way items are handled across different questions in mock.

But the 2011 afternoon is clarified in errata. Working captial is difference between current asset (less cash, marketable securities, and other monetary current asset) and current liability (less current long term debt, payable notes, and other monetary current liability).

Fixed capital investments are related to depreciation because they are based on the same fixed assets. Gross fixed asset changes should be the one you are looking out for in calculating fix capital investment. However if you use net fixed asset changes this have already factor in depreciation so be careful if you use this value incorrectly. Because FCFF = NI + NCC + INT(1-T) - FCInv - WCInv, (NCC - FCInv) in fact NET fixed asset change.