Question
In: Finance
This year, FCF Inc. has earnings before interest and taxes of $9,420,000, depreciation expenses of $1,400,000,...
This year, FCF Inc. has earnings before interest and taxes of
$9,420,000,
depreciation expenses of
$1,400,000,
capital expenditures of
$1,500,000,
and has increased its net working capital by
$475,000.
If its tax rate is
38%,
what is its free cash flow?
Round to to 2 decimals
Solutions
Expert Solution
| Answer: | |
| Calculation of free cash flow | |
| Particular | Amount (in Dollar) |
| EBIT | 9,420,000.00 |
| Less : Interest Expense | - |
| EBT | 9,420,000.00 |
| Less : Tax @38% | 3,579,600.00 |
| Earning after tax | 5,840,400.00 |
| Add: Depreciation expense | 1,400,000.00 |
| Cash flow from operation | 7,240,400.00 |
| Less: Capital Expenditure | 1,500,000.00 |
| Less: Increase in net working capital | 475,000.00 |
| Free cash flow | 5,265,400.00 |
| So, Free cash flow is $5,265,400 (Answer) |
jeff jeffy answered 1 year agoRelated Solutions
Earnings before depreciation, interest, and taxes $1,600,000 Depreciation expense
Earnings before depreciation, interest, and
taxes $1,600,000
Depreciation
expense $100,000
Tax
rate 40%
Interest
expense $10,000
Common
dividends
paid $200,000
Number
of shares of common stock
outstanding $500,000
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Dividends $56 $79
Depreciation $290 $330
Cash $250 $150
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DEPRECIATION
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DEPRECIATION
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EARNINGS BEFORE INTEREST AND TAXES
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INTEREST PAID
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TAXABLE INCOME
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TAXES (34%)
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DIVIDENDS
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2003
CURRENT LIABILITIES
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