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I have a query in our 2010 exam kit Q17 (a)iv Stanzial Inc.
When we are using the expected free cash flow to equity to vaule Besserlot. I though interest should be deducted from profit after tax.
for example:
In answer:
2007 data:
revenve 28100
operating profit 2248
less:interest paid (350)
profit before tax 1898
less:tax 30% (569)
after tax 1329
add back non cash exp 1025
less:increase w.c (172)
less:capital invest (1250)
so:FCFE 932but I thought should be:
2007 data:
revenve 28100
operating profit 2248
less:tax 30% (674)
after tax 1574
add back non cash exp 1025
less:increase w.c (172)
less:capital invest (1250)
less:interest paid (350)
so:FCFE 827Did I miss something? Please
Thank you for your help!working capital= current assets -current liability
06 wc=6206-5520=686
07 wc=686x(1+25%)=857.5
08 wc=686×1.25×1.25=1071.9
09 wc=686×1.25×1.25×1.25=1340so incremental w.c from 07 to 06 is 857.5-686=172, ect
Hi John,
When calculating the value of besserlot using asset based valuation, why is the inventory amount of 1020 taken (why 2380 not taken)?Hi John, In the revised statement of profit or loss, profit or loss 2007 and PV of expected future cash flows, why exceptional items not deducted?
Hi John,
In the above-mentioned question, while calculating initial working capital at the start:
why didn’t we take 70% of the inventory (i.e. 2380 as we calculated it for asset-based valuation as well) as it is mentioned in the other information?
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