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Calculate free cash flow for 2017 for Monarch Textiles, Inc., based on the financial information that...

Calculate free cash flow for 2017 for Monarch Textiles, Inc., based on the financial information that follows. Assume that all current liabilities are non-interest-bearing liabilities and that no fixed assets were sold or disposed of during 2017. (Enter your answer in 1000s.)

income statement 2017
sales 1640
cost of sales 880
operating expenses 190
depreciation 86
interest expense 50
earnings befor taxes 434
tax 173.6
net income 260.4
selected balance sheet items 2016 2017
current assets 40 670
net fixed assets 17 344
current liabilities 290 370

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Expert Solution

*Any doubt please comment

Operating cash flow = EBIT + Depreciation - Taxes = 1640 - 880- 190 - 173.6 = 396.4

Capital spending = 344 +86 -17 = 413

Change in Net working capital = (670-370) - ( 40- 290) = 550

Free cash flow = Operating cash flow - Capital spending - Additions to working capital = 396.4 - 413 - 550 = -566.6

jeff jeffy answered 3 years ago
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