How do i find the operating cash flow and the free cash flow with these provided number and accounts?

Total current assets 480 Depreciation and amortization 50

Total current liabilities 450 Investment 100

Net operation profit after taxes 270 Total common equity 300

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Expert Solution

Operating Cash Flow = Operating Income + Depreciation – Taxes + Change in Working Capital.

= 270+50+30

= 350

Or operating cash flow = earnings after tax+ depreciation and amortization + changes in working capital

Free cash flow:

= Net income + Depreciation/Amortization – Change in Working Capital – Capital Expenditure

= 270+50-30-100

=190

Changes in working capital= current assets- current liabilities, 480-450 = 30.

Capital expenditure means Capital expenditures (CapEx) are funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment.

Capital expenditure is often used to undertake new projects or investments by a company.

Therefore given investments treated as long term, and it is included in balance sheet, so we can assume as capital expenditure

EBIT(1-tax rate)= earnings after tax or profit after tax...

jeff jeffy answered 2 years ago

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