Question

Finding operating and free cash flows   Consider the balance sheets and selected data from the income statement of Keith Corporation that follow

.

a. Calculate the​ firm's net operating profit after taxes​ (NOPAT) for the year ended December​ 31,

20192019.

b. Calculate the​ firm's operating cash flow​ (OCF) for the year ended December​ 31,

20192019.

c. Calculate the​ firm's free cash flow​ (FCF) for the year ended December​ 31,

20192019.

d.​ Interpret, compare and contrast your cash flow estimate in parts​ (b) and​ (c).

Keith Corporation Balance Sheets
	December 31
Assets	2019	2018
Cash	$1,500	$950
Marketable securities	1,780	1,170
Accounts receivable	1,960	1,740
Inventories	2,870	2,770
Total current assets	$8,110	$6,630
Gross fixed assets	$29,450	$28,070
​Less: Accumulated depreciation	14,670	13,150
Net fixed assets	$14,780	$14,920
Total assets	$22,890	$21,550
Liabilities and​ Stockholders' Equity
Accounts payable	$1,620	$1,550
Notes payable	2,770	2,220
Accruals	200	350
Total current liabilities	$4,590	$4,120
​Long-term debt	$4,980	$4,680
Total liabilities	$9,570	$8,800
Common stock	$9,970	$9,970
Retained earnings	3,350	2,780
Total​ stockholders' equity	$13,320	$12,750
Total liabilities and​ stockholders' equity	$22,890	$21,550

Income Statement Data ​(2019​)
Depreciation expense	$1,520
Earnings before interest and taxes​ (EBIT)	2,650
Interest expense	366
Net profits after taxes	1,804
Tax rate	21 %

Answer 1