Hi All,
Pretty late in the game but I have been having trouble with this concept. I believe it is under question 21/22 (I am at the office and I don’t have my book in front of me) in the EOC Questions for Free Cash Flow in the Equity books. The question has you calculate FCFF and uses the standard equation strating with NI. The problem that always trips me up in FCInv. My big question regards the adjustment for depreacation. I was under the impression that if we are given “Net PPE” we find the difference and just subtract it from “NI,” however if we are given “Gross PPE” we find the difference and (here is one are of confusion) subtract or add the depreaciation from it before subtracting it from NI. It makes since to me we add depreciation to the change in FCInv before subtracting it from NI but I think there is a few examples where they subtract it first. When calculating the FCFF/FCFE for those two questions the CFAI answer takes the change in “gross PPE” and subtracts it from NI…

Is it Net or Gross PPE that gets the adjustment?

When adjusting to you add or subtract the depreciation?
Do I have this whole thing incorrect? Very possible becuase I have been studing alone for the last year and tryng to figure things out by yourself.
Another question is how do you guys find the Change in FCInv? I find it by taking the difference in PPE (as I said above) but sometimes it pops up as change in CAPEX or sometimes (when lucky) they show it as a single line item. Is there a general rule I have overlooked?
Thanks everybody and good luck!