For the FCFF calculation it is important to include the total net working capital of the firm.

Question

Quizplus · Accepted Answer

In the FCFF (Free Cash Flow to the Firm) calculation, changes in net working capital are considered, not the total net working capital itself. This is because FCFF aims to measure the cash generated by the firm that is available to all funding holders, focusing on operational cash flow after capital expenditures and changes in working capital.

For the FCFF Calculation It Is Important to Include the Total