Reinvestment Ratio

CFA Level I FRA
#1

Hello,

Reinvestment Ratio = CFO / Total Debt

CFO = 1300

However, you have to solve for Total Debt.

Cash paid for P&E: (2,600)

Cash interest received: 700

Cash dividends received: 600

Cash from investing activies: (1,300)

Cash received from debt issuance: 2,000

Cash interest paid: (400)

Cash dividends paid: (600)

Cash from financing activities: 1000

Is Total Debt = Cash Paid for P&E? As the outstanding balnce represents a debt/liability.

Help :slight_smile:

#2

I read that reinvestment ratio= CFO/ cash paid for long term assets. It is the ability to acquire long term assets with CFO. CFO is 1300 (interest received and dividends received) CFO is 2600 (PP^E) Reinvestment ratio= 0.5 As for total debt, i believe it is includes all interest bearing debt (long term debt + current portion of long term debt + short term debt).