1.

NPV and XNPV

2. FCFF = EBIT x (1 – Tax%) + Depreciation & Amortization – Net Capital Expenditure – Increase
in Working Capital
3. FCFE = FCFF-INT(1-t)+Net borrowings
4. Sensitivity analysis – Using Data tables
5. How are the three Financial Statements linked?
a. Net income from the income statement flowing to the balance sheet and cash flow
statement
b. Depreciation is added back and CapEx is deducted on the cash flow statement,
which determines PP&E on the balance sheet
c. Financing activities mostly affect the balance sheet and cash from finalizing, except
for interest, which is shown on the income statement
d. The sum of the last period’s closing cash plus this period’s cash from operations,
investing, and financing is the closing cash balance on the balance sheet
6. How do you forecast working capital?
a. Turnover ratios (Receivable turn over ratio (Revenue 11, 32 days ) Company collects
receivables 11 times an year, or average customer takes 32 days to pay back)
b. Payable turn over ratio (COGS 7 or 51 days ) company is paying 7 times per year or
company takes 51 days to payback
c. Inventory turnover ratio (CoGS , 30 or 13days) company is able to sell complete
inventory 30 times and taking average of 13 days. Use Cogs for forecasting, but not
sales as inventory is driven by COGS but not sales

Item = days * (COGS or Sales)/365

7. Impact of a purchase on three financial statements.

a. Cash reduces, Gross block increases, cash outflow registered in CFI, no change in
p&L
b. Depreciation comes in pnl reducing profit, retained earnings reduces, asset gross
block reduces all by amount of depreciation
8.