CFA Practice Question

There are 201 practice questions for this study session.

CFA Practice Question

Soft Corp.' FCFE should be ______.
A. -$4
B. -$6
C. -$10
Explanation: FCInv = $125 - $100 = $25.
WC2005 = ($24 + $150) - ($101) = $73.
WC2004 = ($17 + $100) - ($91) = $26.
WCInv = $73 - $26 = $47.
t = $25 / $68 = 37%.
Net borrowing = $40 - $20 = $20.
FCFF = NI + NCC + [Int(1 - t)] - FCInv - WCInv = $43 + $5 + [$5(1 - 0.37)] - $25 - $47 = -$20.85.
FCFE = FCFF - [Int(1 - t)] + net borrowing = -$20.85 - [$5(1 - 0.37)] + 20 = -$4.

User Contributed Comments 3

User Comment
danlan2 No need to use Int(1-t), simply do as follows:

FCFE=NI+NCC-FCInv-WCInv+net borrowing
=43+5-(25+47)+20
=-4
Danny20102 What is A/R under item "Cash"?
LloydBraun7 Accounts Receivable
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