Net WC investment - error in Mock 2011 (?)

This conflicting concept confused me:

In Schweser we all know that Net working capital = Current asset – current liab (excluding cash and portion of current debt).

In mock AM 2011 Q51 when computing net WC, they got it as Current asset – current liabilies (include all cash and notes payable).

Is this a mistake? Notes payable is supposedly interest bearing and should not be counted in working cap (for operation). Also, cash should not be counted as working cap

Yes that’s a mistake.

I think there were 3 errors in the 2011 mock

  • 1 in ethics

  • 1 in Swap calc (they didn’t change the 90/180/…)

  • and this one…

I’d post the link with the 2011 errata but I cannot find it anymore

Which one in ethics?

  1. you are refering the the wrong question. 2011 Q51 AM as nothing to do with FCFE

2.let’s assume you are talking about 2011 Q51 PM.

then i don’t know why you are saying that they include cash since they do not.

they do : current assets : 189.7+126.5 = 316.2 that does not include cash.

they do : current liabilitie = 128.2 which is only account payable and no note payable…

so what’s the point here?

Are you kidding me or you are seeing the wrong version? Yes this one is for PM.

they compute WC inv = 354.2-148.2 -(322-112.7)

if you don’t see the way I see, the only reason is you got the copy after they correct their errata.

yes i guess that we have different version, so yes yours is wrong, so yes you are right :slight_smile: