Is my notes wrong?? NWC calculation???

CFA Level II
#1

Ok so NWC = (cash+AR)-(AP+LTD+current debt) right? I have no idea why in my schweser lecture notes i wrote down the NWC in the outlay = FC+NWC excludes AP. Is AP included or not?? Or is this just specific to capital budgeting and not FCFF calcs?

#2

You do not include Cash and Cash equivalents and interest bearing debt in the calculation of NWC. Why would you need to exclude ap?

#3

Current Assets-CurrentLiabilities =NWC are u referring to change in NWC? if change in NWC you need to deduct it if the project will increase working capital in the initail outaly.

#4

kellyc319 Wrote: ------------------------------------------------------- > Ok so NWC = (cash+AR)-(AP+LTD+current debt) Are we talking about working capital here? If so, only current assets and current liabilities. No LTD and not likely to include current debt. Just AR, inventory, less AP.

#5

sorry it’s late here i think i just typed in the formula for exposure for temporal method. oops.