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

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 2 years ago

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