Net WC investment - error in Mock 2011 (?)

CFA Level II
#1

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

#2

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

#3

Which one in ethics?

#4
  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?

#5

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.

#6

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