when calculating change in WC from a balance sheet, include cash or no

CFA Level II
#1

i thought it wasnt included but i just did a question where it was

#2

Working Capital is current assets - current liabilities, so it would include cash. For a Working Capital ratio it would include cash because of this.

If you’re looking at analyzing investment in net working capital the change in cash would not be included.

It’s excluded from NOA.

Your question needs more specificity.

#3

specifically, finding WCinv. to compute FCFF

#4

It is included, just like JSobes said, current assets includes cash, from level 1.

You should post if you’re talking about Corp Finance or Equity (FFC) just to know exactly what you’re talking about when you say “WC”

Best regards

#5

You’re using schweser, what question was this that cash was included? My understanding is that we are trying to find the change in cash and FCFF so including the change in cash on the B/S would be very confusing. The FCFF to FCFE would only include changes in net borrowing and -int (1-t), and the difference between the overall change and FCFE would only include CFF (issuing stock, paying dividends) to acct for the final mismatch. I don’t understand why we would be included CFF here, it makes no sense

#6

For WCInv with regards to FCFF, you are measuring the change in Net Working Capital which excludes changes in monetary current assets (cash, cash equivalents, etc…) and interest bearing/monetary current liabilities (notes payable, current portion of long-term debt).

#7

thats what I thought, thanks