You have the following information for company XYZ. Ending NWC 100 Beginning NWC 120 Net Capital...

You have the following information for company XYZ.

Ending NWC	100
Beginning NWC	120
Net Capital Spending	200
Depreciation	30
Taxes	50
Interest Paid	20
Dividends Paid	20
EBIT	400

You need to calculate the free cash flow (cash flow from assets).

Solutions

Expert Solution

Free cash flow = Net income - (non cash expenses + changes in working capital + capital expenditure)

Free cash flow = 330 -(30 -20 +200)

Free cash flow =330-210 =120

NET INCOME = EBIT - INTEREST - TAXES = 400-20-50=330

NON CASH expenses - 30 (depreciation)

changes in working capital =100-120 =-20 (end working capital - begin working capital;)

capital expenditure = 200 (depreciation has not been added as it is net capital spending i.e. assumed that depreciation has already adjusted)

jeff jeffy answered 2 years ago

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