Hi, If we get a balance sheet and need to calculate WCInv, is it all current assets - liabilities (excluding cash, ST debt and current portion of LT debt)? Thanks, Soddy


and thats current liabilities, not total liabilities. Thats probably what you meant anyway, though.


Keep in mind on the liabilities side it is all interest bearing debt. That includes notes payable in case they want to play with the wording.

not to confuse you but in Kaplan it is only changes in debtors, creditors and inventory. Could somebody please confirm? Thanks

WCinv for FCF valuation (this includes FCFF and FCFE) does not consider noncash assets and nondebt liabilities (current, of course). Thus, for FCF valuation, it is: [(CA-cash/ce/stms)-(CL-STD/current portion LTD)] For Capital Budgeting it is just: CA-CL. I am referring to the change in working capital investments, of course. On another note, remember that FCinv is capex-sale of PP&E.