wizofoz

I think that the way they explain it is a bit weird. However, there are THREE mistakes in it.

1. Change in net working capitals don't include cash.

2. Notes payable is considered as debt in FCFE calculation and it is not part of working capital (take it out otherwise you are counting it twice when you do the net borrowings).

3. The sign they used is wrong. Increase in payable is positive not negative.

How I'd do this

NI = 120
Depreciation = + 82.5
Change in WC = +1.8
CAPEX = - 165.3
Net borrowing = 12.5

FCFE = 51.5