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Basic Question 2 of 7
Connie's Sporting Goods (CSG) has net income of $805 million for 2011. Using information from the CSG's financial statements below, use the CFO approach to find what FCFF and FCFE should be for CSG. Assume the income tax rate is 30%.
User Contributed Comments 6
| User | Comment |
|---|---|
| StanleyMo | Analyst notes dun repeat questions! |
| aparish | No, it's not a repeat. The first question asks us to calculate FCFF and FCFE from NI. This question asks us to calculate them from CFO. |
| Allen88 | I guess CFO= NI + NCC - WCInv |
| rocyang | agreed, it's the process that counts! |
| Paulvw | Analystnotes is giving us sufficient data for both CFO and NI approaches to make us think about *both*. In the exam we will have sufficient info for one approach, and enough on the other to confuse us if we are unfamiliar. Good question. |
| davcer | Net income approach NI+NCC+int(1-tx)-WCinv-FCinv CFO approach CFO+int(1-tx)-FCinv |
You have a wonderful website and definitely should take some credit for your members' outstanding grades.
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Learning Outcome Statements
explain the appropriate adjustments to net income, earnings before interest and taxes (EBIT), earnings before interest, taxes, depreciation, and amortization (EBITDA), and cash flow from operations (CFO) to calculate FCFF and FCFE;
calculate FCFF and FCFE;
CFA® 2025 Level II Curriculum, Volume 4, Module 22.