Question

Use the data below to compute 2014 FCF (Free Cash Flow):

	2014	2013
Cash	14	20
Short-term investments	9	69
Accounts receivable	370	315
Inventories	552	419
Property, plant & equipment (net)	927	874
Accounts payable	47	35
Short-term debt	96	63
Accrued liabilities	149	134
Long-term debt	663	580
Common stock	130	130
Retained earnings	768	713
Net revenue	3148	2854
Depreciation expense	113	93
Interest	88	64
Taxes	82	82
Net income	255	123

(Round to the nearest whole dollar)

Answer:

111

(114)

Use the data below to compute the change in Gross Fixed Assets (i.e. Change in Gross property, plant & equipment) 2014 2013 Cash 16 19 Short-term investments 7 66 Accounts receivable 365 320 Inventories 553 416 Property, plant & equipment (net) 929 874 Accounts payable 45 35 Short-term debt 99 63 Accrued liabilities 145 130 Long-term debt 663 580 Common stock 130 130 Retained earnings 769 715 Net revenue 3147 2855 Depreciation expense 114 94 Interest 89 65 Taxes 79 83 Net income 254 124 (Round to the nearest whole dollar) Answer: 55 (169) Use the data below to compute 2014 OCF (Operating Cash Flow): 2014 2013 Cash 14 16 Short-term investments 8 68 Accounts receivable 367 316 Inventories 551 419 Property, plant & equipment (net) 929 873 Accounts payable 45 32 Short-term debt 99 65 Accrued liabilities 149 135 Long-term debt 658 582 Common stock 130 130 Retained earnings 768 712 Net revenue 3144 2850 Depreciation expense 114 95 Interest 91 63 Taxes 83 83 Net income 254 123 (Round to the nearest whole dollar) Answer: 429 (437)

Answer 1

I		Calculation of Free Cash Flow
			2014
		Net Income	255
	Add:	Non-Cash Expenses	113	(Depreciation)
	Less:	Increase in working Capital	62	Working Note 1
	Less:	Capital Expenditure	53	Working Note 2
		Free Cash Flow(FCF)	253
	Working Note:1
		Working Capital	2014	2013
		(Current Asset-Current Liability)
		Current Asset
		Cash	14	20
		Short Term Investments	9	69
		Accounts Receivable	370	315
		Inventories	552	419
			945	823
		Current Liability
		Accounts Payable	47	35
		Short Term Debt	96	63
		Accrued Liabilities	149	134
			292	232
		Working Capital	653	591
		Increase in Working Capital	62
	Working Note:2
		Capital Expenditure	2014	2013
		Property Plant & Equiment(Net)	927	874
		Capital Expenditure	53
		Assume: There is no sale of Property,Plant & Equipment
II		Calculation of Change in Gross Fixed Asset
Gross Fixed Asset is the price paid for a business's fixed assets to find its gross fixed assets
			2014	2013
		Property ,Plant & Equipment(Net)	929	874
		Change in Gross Fixed Asset	55
III		Calculation of Operating Cash Flow
			2014
		Net Income	254
	Add:	Non-Cash Expenses	114	(Depreciation)
	Less:	Increase in working Capital	56	Working Note 1
		Operating Cash Flow(OCF)	312
	Working Note:1
		Working Capital	2014	2013
		(Current Asset-Current Liability)
		Current Asset
		Cash	14	20
		Short Term Investments	8	69
		Accounts Receivable	367	315
		Inventories	551	419
			940	823
		Current Liability
		Accounts Payable	45	35
		Short Term Debt	99	63
		Accrued Liabilities	149	134
			293	232
		Working Capital	647	591
		Increase in Working Capital	56