iteracom

With all due respect, erobak's assertion that an increase in Notes Payable to be a debt repayment is incorrect.

Please refer to the Solution to #3 on page 407 [Volume 4 - Reading 43 - Free Cash Flow Valuation] in Example 6 clearly shows that an increase in Notes Payable increases Net Borrowing. The question asks you to find FCFE from Net Income. Net Borrowing was determined as $75M due to an increase in Notes Payables of $50M and an increase in L/T Debt of $25M.



Edited 1 time(s). Last edit at Sunday, May 22, 2011 at 11:02AM by wbrocks.