Champagne, Inc., had revenues of $14 million, cash operating expenses of $9.5 million, and depreciation and...

Champagne, Inc., had revenues of $14 million, cash operating expenses of $9.5 million, and depreciation and amortization of $1.6 million during 2018. The firm purchased $650,000 of equipment during the year while increasing its inventory by $450,000 (with no corresponding increase in current liabilities). The marginal tax rate for Champagne is 30 percent. What is Champagne's cash flow from operations for 2018? What is Champagne's free cash flow for 2018?

Solutions

Expert Solution

Revenue	$ 14.00
Cash operating expense	$ 9.50
Depreciation and amortisation	$ 1.60
EBIT	$ 2.90
Less tax @30%	$ 0.87
Net Profit	$ 2.03

Cash flow from operations for 2018
Net Profit	$ 2.03
Add- Depreciation	$ 1.60
Less- Change in working capital	$ 0.45
Cashflow from operations	$ 3.18

Champagne's free cash flow for 2018
Net Profit	$ 2.03
Add- Depreciation	$ 1.60
Less- Change in working capital	$ 0.45
Less- capital expenditure	$ 0.65
Cashflow from operations	$ 2.53

For more clarrification please comment

Thumbs Up please !. Thanks

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

A company had total revenues of $500 million, operating margin of 40%, and depreciation and amortization...

A company had total revenues of $500 million, operating margin of 40%, and depreciation and amortization expense of $80 million over the trailing twelve months. The company currently has $600 million in total debt and $100 million in cash and cash equivalents. If the company's market capitalization (total value of its equity) is $2 billion, what is its EV/EBITDA multiple? Round to two decimal places (Assume EBIT = Operating income).

A company had total revenues of $35 million, operating margin of 28.2%, and depreciation and amortization...

A company had total revenues of $35 million, operating margin of 28.2%, and depreciation and amortization expense of $10 million over the trailing twelve months. The company currently has $268 million in total debt and $61 million in cash and cash equivalents. The company's shares are currently trading at $30.5 per share and there are 6 million shares outstanding. What is its EV/EBITDA ratio? Round to one decimal place.

A company had total revenues of $71 million, operating margin of32.1%, and depreciation and amortization...

A company had total revenues of $71 million, operating margin of 32.1%, and depreciation and amortization expense of $23 million over the trailing twelve months. The company currently has $235 million in total debt and $47 million in cash and cash equivalents. The company's shares are currently trading at $29 per share and there are 11 million shares outstanding. What is its EV/EBITDA ratio? Round to one decimal place.

1 Vasudevan Inc. recently reported operating income of $2.75 million, depreciation of $1.20 million, and had...

1 Vasudevan Inc. recently reported operating income of $2.75 million, depreciation of $1.20 million, and had a tax rate of 40%. The firm's expenditures on fixed assets and net operating working capital totaled $0.6 million. How much was its free cash flow, in millions? a. $2.25 b. $2.03 c. $1.93 d. $2.14 e. $2.36 2. AT&T would like to improve their ROE to 15%. They think they can maintain profit margin of 11% while maintaining their total asset turnover at...

1. XYZ Corp. expects the following revenues, cash expenses, and depreciation charges in the future: Year...

1. XYZ Corp. expects the following revenues, cash expenses, and depreciation charges in the future: Year 1 2 3 Revenues $89,000 $106,000 $145,000 Cost of goods sold $38,000 $ 49,000 $53,000 Selling expenses $11,000 $ 13,000 $14,000 O ther cash operating expenses $10,000 $ 11,000 $12,000 Depreciation $ 9,500 $ 13,500 $15,000 This business is in the 22 percent tax bracket. Please compute the after-tax cash flows from operations for this investment for each of the years. After-tax operating cash...

In 2020, Garage Doors Inc. had sales of $350 million. Operating costs, depreciation and interest were...

In 2020, Garage Doors Inc. had sales of $350 million. Operating costs, depreciation and interest were $230 million, $30 million and $10 million respectively. It’s corporate tax rate is 40%. The company reported $40 million in operating current assets and $14 million in operating current liabilities. It also reported net property, plant and equipment of $70 million and Long Term Debt $180 million. For 2019, net operating working capital was $28 million, net property, plant and equipment was $60 million...

Alani’s Hawaiian segment had revenues of $2,079 million, operating income of $1,023 million, and average assets...

Alani’s Hawaiian segment had revenues of $2,079 million, operating income of $1,023 million, and average assets of $1,333 million. The Hawaiian segment return on assets is: 49.21% 130.30% 64.12% 155.96% 76.74% Assume that the custodian of a $450 petty cash fund has $60.70 in coins and currency plus $384.00 in receipts at the end of the month. The entry to replenish the petty cash fund will include: A credit to Cash for $389.30. A debit to Petty Cash for $384.00....

64. Alani’s Hawaiian segment had revenues of $2,029 million, operating income of $973 million, and average...

64. Alani’s Hawaiian segment had revenues of $2,029 million, operating income of $973 million, and average assets of $1,283 million. The Hawaiian segment return on assets is: 63.23% 47.95% 75.84% 131.86% 158.14% 73. A company has $101,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 3% of outstanding receivables are uncollectible. The current balance (before adjustments) in the allowance for doubtful accounts is a(n) $910 debit. The journal entry to record the adjustment...

The MacCauley Company has sales of $200 million and total operating expenses (excluding depreciation) of $130...

The MacCauley Company has sales of $200 million and total operating expenses (excluding depreciation) of $130 million. Straight-line depreciation on the company's assets is $15 million over 4 years. The Upfront Cost equals to the total depreciable value on the company’s assets. Assume that all taxable income is taxed at 30 percent. Assume also that net operating working is 3% of sales in each year. Calculate the MacCauley Company's WACC using 4% cost of debt, 12% cost of equity. There...

Year 1 Year 2 Revenues 128.9 151.6 COGS and Operating Expenses (other than depreciation) 49.6 52.7...

Year 1 Year 2 Revenues 128.9 151.6 COGS and Operating Expenses (other than depreciation) 49.6 52.7 Depreciation 24.9 43.5 Increase in Net Working Capital 3.4 8.1 Capital Expenditures 27.3 43.2 Marginal Corporate Tax Rate 35% 35% a. What are the incremental earnings for this project for years 1 and 2? (Note: Assume any incremental cost of goods sold is included as part of operating expenses.) b. What are the free cash flows for this project for years 1 and 2?...

Subjects