CFA Practice Question

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CFA Practice Question

When forming an estimate for free cash flow to the firm (FCFF) using cash flow from operations (CFO) as the starting point, an analyst needs to estimate the following items except for:
A. Non-cash expenses.
B. Interest expense.
C. Investment in fixed capital.
Explanation: FCFF = CFO + Interest expense(1 - tax rate) - investment in Fixed Capital

Depreciation expenses (or non cash expenses) have already been added back when cash flow from operations (CFO) was computed.

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