Interest Payable & FCFF
Hey all,
In addition to my previous post - I have a confusing follow up question.
When calculating FCFF using the formula: EBIT(1-t) + Depreciation + Change in WC - CapEx
When we are calculating the change in WC, do we take the change in interest payable? I think not because:
If Interest Payable increased, we are already including it when we subtract interest in the formula
If Interest Payable decreased, well i'm not sure.
Please assist me in clearing my confusion.
It's not capital structure neutral (i.e. it's only payable to debt-holders), so you'd ignore it.
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