Question

What is the free cash flow of a firm with revenues of $214 million, operating profit margin of 49%, tax rate of 21%, depreciation and amortization expense of $29 million, capital expenditures of $31 million, acquisition expenses of $10 million and change in net working capital of $11 million? Answer in millions, rounded to one decimal place (e.g., $245.63 = 245.6).

Answer 1

Free Cash Flow = Net income + Depreciation – Capital expenditure – Increase in net working Capital

Revenue	$               214.00 M
*Operating Profit or EBIT	$               104.86 M
Less: Tax @ 21%	$                 22.02 M
Net Income	$                 82.84 M
Add: Depreciation	$                 29.00 M
Less: Cap expenditure	$                 31.00 M
Less: Acquisition cost	$                 10.00 M
Less: Change in working capital	$                 11.00 M
FCF	$                 59.84 M

                         

*Operating Profit = Revenue x operating profit margin

                                = $ 214 M x 0.49 = $ 104.86 M

Free cash flow of the firm is $ 59.84 M or $ 59.8 M