this will be on the exam... net, difference, determine, question, correct

bcp901

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]

xilinx_altera

its ok SkipE99.. we'[re all sold out at this point im with u

comp_sci_kid

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.

ningning1984

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

MiniMe7

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.

NO EXCUSES

Swanand

1. Your current liabilities exclude interest bearing debt.

NO EXCUSES