Does anyone have a definitive equation for calculating Working Capital Investment in the free cash flow model that has gotten them to the correct answer every time. What is included and what is excluded?
What you mean? WC is basically Current Assets Minus Current Liabilities while excluding cash/investments/notes payable
Ok so those are the only three items that are excluded: Cash, Investments, Notes Payable and Short Term Debt?
For current assets, you exclude anything that is non-working… That is usually cash/investments but it could be anything. I’ve only seen those items listed.
Same with current liabilities. You exclude debts and notes, but everything else is considered part of working cap. Potentially there could be lots of other exclusions but those are the general ones listed.