OK…2 issues, similar question. 1. When calculating FCFF you need to determine change in NWC. It is my understanding that you take Current Assets - Cash and net that with Current Liabs.? I have had trouble with this the past two years. Is this understanding correct? (side note, when you calculate FCINV you take difference in gross PP&E right?) 2. When calculating Aggregate Accruals you take [Total Assets- Cash/ST Investments] - [Total Liabs - ST/LT debt]
- Your current liabilities exclude interest bearing debt.
ahhhh yes…current liabilities ONLY with no ST or LT debt or NOTES payable taxes payable and any of that nonsense right?
SkipE99 Wrote: ------------------------------------------------------- > ahhhh yes…current liabilities ONLY with no ST or > LT debt or NOTES payable taxes payable and any of > that nonsense right? Right.
effin CFAI mock threw me completely off… Balance Statement in the question is as follows: 2009 2008 Cash and cash equivalents $32 $21 Accounts receivable $413 $417 Inventories $709 $638 Other current assets $136 $123 Total current assets $1,290 $1,199 Long-term assets, net $4,814 $4,522 Total assets $6,104 $5,721 Current liabilities $2,783 $2,678 Long-term debt $2,249 $2,449 Common stockholders’ equity$1,072 $594 Total liabs n stck hldrs equity 6,104 5,721 The question was what is the FCFF (so im thinking oh yeah i got this) and all of the inputs were given fairly straightforward with exception to the NWCInv. So I read the BS as recorded above. I come to calculating the CL part and recall that the input is "Current Liabilities excluding ‘interest bearing debt’ or ‘ST/LTdebt’’ and think…"Well, CL is $2,783 for 2009 and $2,678 for 2008. If "interest bearing debt/ST/LT Debt is $2,249 for 2009 and $2,449 for 2008, lets just go ahead and exclude/subtract that bad boy from CL because in FCFF its “CL ‘excluding’ ST/LT Debt.” I am a dumbass and now see: Current Liabilities w/o “interest bearing/st/lt debt” is = to “CURRENT LIABILITIES”. Because they listed CL above LTD and did not include a “Total Liabilities” my brain sold me out. FML
its ok SkipE99… we’[re all sold out at this point im with u
Lol, sometimes you just look at a question and think “HA!, Silly CFAI trying to trick us with their trickery and play me for a fool, I’ll show them!” And then we proceed to make many many dumb@ss mistakes when the answer was in front of us the entire time.