spreads

psriniva Wrote:
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> All right. after going through all the responses
> above, I am totally confused about how to treat
> the Notes Payable. Some of the responses are
> conflicting with others in this thread.
> Would some one please tell us all how to treat
> Notes payable while calculating Net Borrowing.

I got it.

Anyone get the schweser videos? They have two slides specifically treating Net Borrowing.

Net Borrowing Adjustments

1) Long Term Debt:
- ADD debt issuances to net income to arrive at FCFE
- SUBTRACT debt repurchases from net income to arrive at FCFE
- Net Borrowings = new debt - debt repurchases

2) Notes Payables:
- Increase in notes payables, ADD to FCFE
- Decrease in notes payables, SUBTRACT from FCFE

3) Current Portion of Long Term Debt
- Increase in short term debt, ADD to FCFE
- Decrease in short term debt, Subtract from FCFE