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December 2009 attempt
In Kodiak company, working capital is calculated by net current assets of 270 minus cash reserve of 50.
Why cash is deducted from net current assets to calculate working capital??Because to get the FCFE you are preparing a cash flow statement.
If you think back to Papers F3 and F7, the cash flow statement is arriving at the increase/decrease in cash over the year, and we only adjust (with regard to working capital) for the movement in receivables, inventories and payables.
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