WCInv examples from CFAI textbook net, increase, accounts, examples, 440

anshultongia

p. 432, #2

WCI = increase in a/r + increase in inventory - increase in accounts payable - increase in accrued taxes and liabilities... = 39+44-22-23 = 38

Furthermore, net borrowing is right from my formula sheet: increase in notes payable + increase in long term debt

I got that, and for a second I though I may have things under control.


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page 440, #13A

Computing FCFE: ni+depreciation-FCI-WCI+net borrowing

net income = 80
depreciation = 23
WCI = the answer is 41...HOW DID THEY GET THAT? There is no accounts receivable, I guess inventory is net ppe (not sure about that), there is no accounts payable, and there is no accrued liabilities....so I'm screwed!

FCI = the answer is 38, but I can't figure out how they got 38....screwed again

Net borrowing = there is no notes payable and long term debt is 0, so I'm screwed on NB, too.

That's why I've given up on FCI, WCI a million times

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Page 446, #20

FCFF =
net income = 485
depreciation = 270
interest = 195(1-.32) = 132.6

WCI = increase in a/r + increase in inventory - increase in accounts payable - increase in accrued taxes and liabilities = 57 (yes, got it!)

FCI = 523

FCFF = 308 - yes, got it!

and I even got NB when computing FCFE.

Maybe somebody can help me with computing FCFF with #13

Gracias