Question

The Umbrella Corporation has the following Income statement and balance sheet for 1993. The firm paid out 50% of it's Net Income as Dividends. What is the firms Cash Flow From Assets from the Free Cash Flow Perspective? (in this problem you must use the Free Cash Flow method to get CFFA, using the Investors perspective method will not give you the same answer due to the limitations of the system.)

(Round to nearest penny and do not enter commas, e.g. 1234.56)

1993 Income Statement

Revenue	242164
Costs	12130
Depreciation	19852
Ebit
Interest Expense	9600
Taxable Income
Tax Expense @ 22%
Net Income

1993 Balance Sheet

Year	1992	1993		1992	1993
Current Assets	19978	17011	Current Liabilities	13336	16306
Fixed Assets	148437	169545	Long-Term Debt	129440	146491
			Common Stock	30622	37573

Answer 1

	1993 Income Statement
Revenue	242164
less : Costs	12130
less : Depreciation	19852
EBIT	210182
less : Interest Expense	9600
Taxable Income	200582
less : Tax Expense @ 22% (taxable income * tax rate)	44128
Net Income	156454
Balance Sheet
Year	1992	1993
Current Assets	19978	17011
Fixed Assets	148437	169545
Current Liabilities	13336	16306
Long-Term Debt	129440	146491
Common Stock	30622	37573
FCFF = NOPAT + Depreciation - Capex - change in working capital
163941.96+19852-21108-(-5937) = 168622.96
FCFF = 168,622.96
Workings
NOPAT = EBIT * (1-tax rate)
210182*(1-22%) = 163941.96
Depreciation = 19852
Capex = 1993 fixed assets - 1992 fixed assets
169,545 - 148,437 = 21108
Change in working capital
=(17011-19978)+(13336-16306) = - 5937