标题: Fixed Capital Investment [打印本页] 作者: sgupta0827 时间: 2013-4-22 08:08 标题: Fixed Capital Investment
There seems to be many different ways of calculating Fixed Capital Investment for FCFF. I always thought it was the difference in the Gross Fixed Assets. I’ve also seen when Fixed capital is presented as Net and the method used was adding current depreciation expense onto the current year Net Fixed Assets minus Net Fixed Assets (eg. Net 2011 + dep exp 2011 - Net 2010). In the BSAS mock, they just use the difference between Net Fixed Assets. This differs to the methodology used in FCFF question on the CFA mock, where they add current dep exp?? Can anyone make any sense of this?作者: luckygiftvn 时间: 2013-4-22 08:09
Depreciation expense is definitely added back to Net amounts to account for used up portions of fcinv. Think of it like eating chocolate bars: I started with 5, ate 2, and ended up with 4. How many did I buy? 4-5+2=1. Same concept as inventory accounting.作者: joehogue 时间: 2013-4-22 08:09
Thanks KewZee, it looks to be an error in the BSAS 2012 mock作者: zephyranalyst 时间: 2013-4-22 08:10
On another note, sometimes if they provide net fixed asset, it’s easier to just calculate the delta from there and use the figure for FCFF or FCFE calculation w/o the need to separately find DEP and FCInv as (DEP - FCInv) = - (change in net fixed asset)作者: Nishant1 时间: 2013-4-22 08:11
what about if there are sale of assets?作者: Daniel1985 时间: 2013-4-22 08:11
if there is a gain subtract from NI. If there is a loss add作者: trogulj 时间: 2013-4-22 08:12
two ways
End Gross PP&E - Beg Gross PP&E - Gain on sale
End Net PP&E - Beg Net & PP&E + Depreciation - Gain on sale
If loss on asset, add it back.作者: Bad5shah 时间: 2013-4-22 08:12
to validate my point look at page 144 schweser equitities book作者: canadiananalyst 时间: 2013-4-22 08:13
Wouldn’t the book value be reflected in the Net #’s, not the gross?
Ending net = beginning net - depreciation + purchases - book value?
And then gain/loss added/subtracted with book value?
So CapEx would be Purchases - Book Value of assets sold - (+) gain (loss)作者: RealEstate_CFA 时间: 2013-4-22 08:13
N/M - its the same作者: defour44 时间: 2013-4-22 08:14
The formulas presented are correct but give me a tough time in memorizing the +/- signs and which way they go. I prefer to do it the grade school way of a vertical Equation and then solve for FCInv. It feels more intuitive that way.
Beg Net PPE
(-) Depreciation
(?)FCInv
——————————-
=Ending Net PPE(usually given on a b/s statement or its just End Gross PPE less End Accumulated Dep)
Whatever gives you FCInv you then plug into your FCFF or FCFE formulas e.g
FCF= CFO + int(1-t) - {(?)FCInv you solved }
It dosn’t matter if they sell an Asset for a gain or loss or whateva because the equation still holds. Just rember to hold what ever sign you get once you plug it into your respective FCFF/FCFE calculation.
The only way this method fails is if they ask specifically for the FCInv in a question. If that happens then FCInv is just Capex - Proceeds from sale.
