What will be the free cash flow if cash flow from operation is 850,000 , dividend...

What will be the free cash flow if cash flow from operation is 850,000 , dividend paid 20,000, cash recieved from sale of fixed assets is 2000, purchase of new equipment of 5000. cash flow from financing activity is 300,000.

please show the workings

Solutions

Expert Solution

Free cash flow is the cash a company produces through its operations, less the cost of expenditures on assets. In other words, free cash flow (FCF) is the cash left over after a company pays for its operating expenses and capital expenditures.

Free cash flow represents the cash flow that is available to all investors before cash is paid out to make debt payments, dividends, or share repurchases. So dividend paid and cash flow from financing activity will not be considered while computing Free cash flow.

Sale of fixed asset will not be considered as part of Free cash flow since it is one time event and not part of every day cash.

Free cash fow=Cash from operations -purchase of new equipment =$850,000-$5,000=$800,000

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Can free cash flow be a negative number? What does a lack of free cash flow...

Can free cash flow be a negative number? What does a lack of free cash flow indicate for a business? Please indicate why free cash flow may be a better indicator than Cash Flows from Operating Activities of financial strength.

For a company, the cash flow from assests (or free cash flow) projections for the next...

For a company, the cash flow from assests (or free cash flow) projections for the next three years are as follows. After year 3, the company will continue growing at a constant rate of 1.5%. the firm's tax rate is 3% and will maintain a debt-equity ratio of 0.50. the risk-free rate is 3%, the expected market risk premium over the risk free rate is 6%, and the company's equity beta is 1.50. The company's pre-tax cost of debt is...

What conclusions concerning the management of cash can be drawn from the free cash flow data?

Kendra Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and...

Kendra Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next 2 years, respectively; after the second year, FCF is expected to grow at a constant rate of 9%. The company's weighted average cost of capital is 12%. What is the terminal, or horizon, value of operations? (Hint: Find the value of all free cash flows beyond Year 2 discounted back to Year 2.) Round your answer to the nearest cent....

A company's most recent annual Free Cash Flow is $180,000,000. Free cash flow is expected to...

A company's most recent annual Free Cash Flow is $180,000,000. Free cash flow is expected to grow by 15% per year for the next 10 years and then grow by 3% per year thereafter. Investors required rate of return is 11%. What is the current value of the stock? a. $11,300,755,080 b. $2,250,000,000 c. $5,404,011,121 d. $1,636,363,636

DO NOT ANSWER Should the dividend discount model and free cash flow model yield the same...

DO NOT ANSWER Should the dividend discount model and free cash flow model yield the same stock price? What are the advantages and disadvantages of the free cash flow valuation model relative to the dividend growth model? What situation is ideally suited to valuation with the dividend growth model?

ABC Enterprise has never paid a dividend. Free cash flow is projected to be $20 million...

ABC Enterprise has never paid a dividend. Free cash flow is projected to be $20 million and $30 million for the next 2 years, respectively; after the second year, FCF is expected to grow at a constant rate of 7%. The company’s weighted average cost of capital is 12%. ABC has short-term investments of $100 million, the total debt of $80 million, and preferred stock of $20 million. ABC has 10 million shares of common stock. What is the intrinsic...

Answer the following questions regarding free cash flow model and its differences with the dividend discount...

Answer the following questions regarding free cash flow model and its differences with the dividend discount model. Write out the equation for the value of operations. Explain how to use the free cash flow valuation model to find the price per share of common equity. What are value drivers? Does an increase in the operating profitability ratio always cause an increase in the value of operations? Does a decrease in the capital requirement ratio always cause an increase in the...

A company generated free cash flow of $43 million during thepast year. Free cash flow...

A company generated free cash flow of $43 million during the past year. Free cash flow is expected to increase 6% over the next year and then at a stable 2.8% rate in perpetuity thereafter. The company's cost of capital is 11.2%. The company has $330 million in debt, $20 million of cash, and 28 million shares outstanding. What's the value of each share?

The term “free cash flow” is frequently applied to cash flows that differ from the definition...

The term “free cash flow” is frequently applied to cash flows that differ from the definition for FCFF that should be used to value a firm. Two such definitions of free cash flow are given below. Compare these two definitions for free cash flow with the technically correct definition of FCFF used in the reading. A. FCF = Net income + Depreciation and amortization − Cash dividends − Capital expenditures B. FCF = Cash flow from operations (from the statement...

Subjects