Question

You have gather this information on it for $500,000 sells $10,000 cash dividends $300,000 cost of good sold $20,000 administrative expenses $20,000 depreciation expense is $40,000 interest expense $10,000 purchase a product of equipment no changes in what capital and tax rate is 21% what is the free cash flow

Answer 1

Free cashflow = Operating cash inflow - Capital Expenditure

Particulars	Amount
Sale	500,000
Less: Cost of Good Sold	(300,000)
Less: Admin Expenses	(20,000)
Less: Depreciation	(20,000)
Less: Interest Expense	(40,000)
PBT	120,000
Less: Tax @ 21%	(25,200)
PAT	94,800
Add: Depreiciation	20,000
Add: Interest	40,000
Operating Cash inflow	154,800

Free cashflow = 154800 - 10,000

                     = 144,800 Answer