Question

One of the components in the calculation of Free Cash Flow is the Net Change in...

One of the components in the calculation of Free Cash Flow is the Net Change in Working Capital. The calculation of this number includes all of the following accounts except for:

A.

Accounts Payable.
B.

Accounts Receivable.
C.

Accrued Unearned Revenue.
D.

Cash.
E.

Inventories.
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Answer #1

One of the components in the calculation of Free Cash Flow is the Net Change in Working Capital. The calculation of this number includes all of the following accounts except for:

Accured - unearned Revenue.

Note: Accrued revenue means the revenue has been earned but not received and Unearned revenue means revenue which has not been earned yet but the payment has been received. Both these items are not included in calculation of Net Change in working capital.

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