Question

1. What is the firm’s free cash flow (i.e., cash flow from assets) for 2017?

Cash                                                                      $423

Accounts Receivable                                            15% of Total Revenue

Accounts Payable                                                 20% of Cost of Goods Sold

Notes Payable                                                       $800

Inventory                                                              $2,900

Net Fixed Assets                                                   $14,800

Long-term Debt                                                    $3,500

Common Stock                                                     $10,000

Total Revenue                                                      $7,200

Cost of Goods Sold                                               50% of Total Revenue

Depreciation Expense                                           $1,200

Selling, General, & Administrative Expense       $1,000

Interest Expense                                                   10% of Long-term Debt

Income Taxes                                                       35% of Taxable Income

Answer 1

Revenue
Sales		7200
Cost of goods sold		3600
Gross Profit		3600
Expenses
Depreciation	1200
Selling, General & Adm. Exp	1000
Interest Expense	350
Total Expenses		2550
Income before tax		1050
Tax (35%*1050)		367.5
Net Income after tax		682.5
Add Depreciation		1200
Free Cash Flow =		1882.5

Cash	423
Accounts Receivable	1080
Accounts Payable	720
Notes Payable	800
Inventory	2900
Net Fixed Asset	14800
Long term Debt	3500
Common Stock	10000
Total Revenue	7200
Cost of goods sold	3600
Depreciation	1200
Selling, General & Adm. Exp	1000
Interest Expense	350