What is excluded from current liabilities when calculating NWC for DCF
I'm doing a DCF project right now and I'm trying to figure out what I should exclude from current liabilities.
Current Liabilities:
Accounts payable
Accrued compensation and related costs
Accrued occupancy costs
Accrued taxes
Insurance reserves
Other accrued liabilities
Deferred revenue
This is taken strait from there 10-k. I'm trying to figure out if I use all of these current liabilities when figuring out the Net Working Capital for my DCF model.
If they use it in their 10-K, I'd stick to what they use. You have no idea what exactly they're classing as "Other Accrued Liabilities" etc.
I still not sure if I was supposed to include deferred revenue as part of my calculations for DCF
Definitely include deferred revenue, including any non-current portions.
When you add net change in working capital to get FCF, deferred revenue will be automatically included
Wait, now I'm confused, do I or don't I include it in my initial NWC calculation?
you do include it.
Components for working capital for dcf (Originally Posted: 07/12/2016)
I understand working capital is CA-CL. What should we consider as Current Asset? Should receivables from related parties and associates be counted as current assets in this case? Assuming, we are looking at the consolidated / group level.
Non-cash current assets and non-interest bearing liabilities. So obviously don't use cash in CA. Also, take out any lines of credit, letters of credit, or current maturities of lt debt from CL
Yup, I understand how to calculate the standard way for calculating working capital, typed CA-CL in short as I assumed most of readers here would have the basic understanding. The main question here is do we add receivables from related parties and associates too? Not too sure if there is a difference compared to the normal receivables we usually deal with.
Thanks for your clarification
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