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The answer scheme shows that dividend capacity was calculated using the direct method where calculation is based on operating profit after interest and tax.
Could we use indirect method instead? Where interest expense is deducted after FCF (together at the part where debt repayment deduction is) is calculated?
However, why is it that debt repayment wasn’t included? Does it mean that dividend capacity means FCF instead of FCFE?
The dividend capacity is the free cash flow to equity.
In this particular question there isn’t any other way of arriving at the figure.
There is no mention of a debt repayment in the question 🙂
(The current capital structure is not expected to change in the foreseeable future)Sir i am confused ,we think according to contract currency which is $, so in the near future i am selling euros to buy dollars right??? so we enter into “buy $ June futures but sir if we look at march futures and june futures its currency is euro so how can we enter into a “buy $ future”?
Also sir No of contracts will be like this??
=20 millioneuros/0.8656euro/$125000
=185 contractsis it correct sir?
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