Accumulated other comprehensive income in FCF?
IB
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(Senior Monkey, 74
Points)
on 7/31/09 at 5:46pm
Should I include the changes in the AOCI account in my FCF calculation?
Will doing this undo foreign exchange effects?
Thank you guys for the help






i don't think you should...
if you look at SFAS 130 u'll see that other comprehensive income is part of total comprehensive income but is generally exluded from net income. Accumulated comprehesive income is the amount(s) in comprehensive income either increase of decrease shareholder's equity but not derived from the income statement or through any company transactions in its own equity shares.
Generally, other comprehesive income includes the following items: foreign currency translation adjustments, minimum pension liability adjustments, and unrealized gains or losses on available-for-sale investments and derivative instruments.
Hope this helps
Since AOCI is non cash AND
Since AOCI is non cash AND doesn't flow through the income statement, you should not adjust for it in your FCF calculations. If it flows through the income statement, it would be in your retained earnings account and not AOCI. I am also not familiar with all the accounts in AOCI but the most common ones like unrealized gains/losses on available for sale securities are non-cash.
Thanks for the help guys!
Thanks for the help guys!