Question

In: Finance

The 2018 income statement for Duffy’s Pest Control shows that depreciation expense was $193 million, EBIT...

The 2018 income statement for Duffy’s Pest Control shows that depreciation expense was $193 million, EBIT was $496 million, and the tax rate was 35 percent. At the beginning of the year, the balance of gross fixed assets was $1,566 million and net operating working capital was $413 million. At the end of the year, gross fixed assets was $1,809 million. Duffy’s free cash flow for the year was $409 million.

Calculate the end-of-year balance for net operating working capital

Solutions

Expert Solution

Calculate operating cash flow
Operating cash flow EBIT - Taxes + Depreciation
Operating cash flow 496 - (496*35%) + 193
Operating cash flow 496 - 173.60 + 193
Operating cash flow $515.40 million
Calculate investment in operating capital
Free cash flow Operating cash flow - Investment in operating capital
409 515.40 - Investment in operating capital
Investment in operating capital 515.40 - 409
Investment in operating capital $106.40 million
Calculate ending level of net operating working capital
Investment in operating capital (1809-1566)+(Ending net operating working capital - 413)
106.4 243 + Ending net operating working capital - 413
106.4-243+413 Ending net operating working capital
Ending net operating working capital $276.40
Thus, end of year balance for net operating working capital is $276.40 million

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

The 2018 income statement for Duffy’s Pest Control shows that depreciation expense was $195 million, EBIT...
The 2018 income statement for Duffy’s Pest Control shows that depreciation expense was $195 million, EBIT was $500 million, and the tax rate was 36 percent. At the beginning of the year, the balance of gross fixed assets was $1,570 million and net operating working capital was $415 million. At the end of the year, gross fixed assets was $1,815 million. Duffy’s free cash flow for the year was $413 million. Calculate the end-of-year balance for net operating working capital....
The 2018 income statement for Duffy’s Pest Control shows that depreciation expense was $192 million, EBIT...
The 2018 income statement for Duffy’s Pest Control shows that depreciation expense was $192 million, EBIT was $494 million, and the tax rate was 30 percent. At the beginning of the year, the balance of gross fixed assets was $1,564 million and net operating working capital was $412 million. At the end of the year, gross fixed assets was $1,806 million. Duffy’s free cash flow for the year was $407 million. Calculate the end-of-year balance for net operating working capital.
The 2015 income statement for Duffy’s Pest Control shows that depreciation expense was $202 million, EBIT...
The 2015 income statement for Duffy’s Pest Control shows that depreciation expense was $202 million, EBIT was $514 million, and the tax rate was 30 percent. At the beginning of the year, the balance of gross fixed assets was $1,584 million and net operating working capital was $422 million. At the end of the year, gross fixed assets was $1,836 million. Duffy’s free cash flow for the year was $427 million. Calculate the end-of-year balance for net operating working capital....
Problem 2-33 Free Cash Flow (LG2-5) The 2021 income statement for Duffy’s Pest Control shows that...
Problem 2-33 Free Cash Flow (LG2-5) The 2021 income statement for Duffy’s Pest Control shows that depreciation expense was $201 million, EBIT was $512 million, and the tax rate was 30 percent. At the beginning of the year, the balance of gross fixed assets was $1,582 million and net operating working capital was $421 million. At the end of the year, gross fixed assets was $1,833 million. Duffy’s free cash flow for the year was $425 million. Calculate the end-of-year...
The 2015 income statement for Egyptian Noise Blasters shows that depreciation expense is $82 million, NOPAT...
The 2015 income statement for Egyptian Noise Blasters shows that depreciation expense is $82 million, NOPAT is $245 million. At the end of the year, the balance of gross fixed assets was $660 million. The change in net operating working capital during the year was $72 million. Egyptian’s free cash flow for the year was $190 million. Calculate the beginning-of-year balance for gross fixed assets. (Enter your answer in millions of dollars.)
Question: Based on the following transactions, complete this income statement: Sales: Operating Expense: Depreciation Expense: EBIT:...
Question: Based on the following transactions, complete this income statement: Sales: Operating Expense: Depreciation Expense: EBIT: Intresrest Expense: Pre-tax Income: Taxes: Net Income: Dividened: Paid to Retained Earning: 1. Earn $85,000 in sales revenue: $40,000 into Accounts Receivable and $45,000 in cash. 2. The sales require $50,000 worth of existing inventory. $20,000 of additional inventory is purchased on credit and applied to the Accounts Payable. 3. $30,000 is collected from Accounts Recievable. 4. $35,000 of the Accounts Payable is due...
Last year Miami Rivet had $5 million in operating income (EBIT). Its depreciation expense was $1...
Last year Miami Rivet had $5 million in operating income (EBIT). Its depreciation expense was $1 million, its interest expense was $1 million, and its corporate tax rate was 25%. At year-end, it had $14 million in operating current assets, $3 million in accounts payable, $1 million in accruals, $2 million in notes payable, and $15 million in net plant and equipment. Assume Miami Rivet has no excess cash. Miami Rivet uses only debt and common equity to fund its...
Last year Miami Rivet had $5 million in operating income (EBIT). Its depreciation expense was $1...
Last year Miami Rivet had $5 million in operating income (EBIT). Its depreciation expense was $1 million, its interest expense was $1 million, and its corporate tax rate was 25%. At year-end, it had $14 million in operating current assets, $3 million in accounts payable, $1 million in accruals, $2 million in notes payable, and $15 million in net plant and equipment. Assume Miami Rivet has no excess cash. Miami Rivet uses only debt and common equity to fund its...
1) Last year Miami Rivet had $5 million in operating income (EBIT). Its depreciation expense was...
1) Last year Miami Rivet had $5 million in operating income (EBIT). Its depreciation expense was $1 million, its interest expense was $1 million, and its corporate tax rate was 25%. At year-end, it had $14 million in operating current assets, $3 million in accounts payable, $1 million in accruals, $2 million in notes payable, and $15 million in net plant and equipment. Assume Miami Rivet has no excess cash. Miami Rivet uses only debt and common equity to fund...
Last year Charlie Brown had $5 million in operating income (EBIT). It’s depreciation expense was $1...
Last year Charlie Brown had $5 million in operating income (EBIT). It’s depreciation expense was $1 million, its interest expense was $1 million, and its corporate tax rate was 40%. At year-end, it had $14 million in current assets, $3 million in accounts payable, $1 million in accruals, $2 million in notes payable, and $15 million in net plant and equipment. Charlie had no other current liabilities. Assume the Charlie’s only noncash item was depreciation. What was the company’s net...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT