Bay Inc. has $4.4 million EBIT, $1.2 million depreciation, a tax rate of .4, a capital expenditure...

Bay Inc. has $4.4 million EBIT, $1.2 million depreciation, a tax rate of .4, a capital expenditure of $0.5 million, and an increase in NOWC of $1.3 million. To the nearest 0.1 million, what is its free cash flow?

Expert Solution

Free cash flow = EBIT - Taxes + Depreciation - Capital expenditure - Increase in NOWC

Taxes = EBIT * Tax rate

= 4.40 * 0.40

= 1.76 million

Free cash flow = 4.40 - 1.76 + 1.20 - 0.50 - 1.30

= 2.04 million

or 2.0 Million

jeff jeffy answered 2 years ago

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