Question

Finding operating and free cash flows Consider the balance sheets and selected data from the income statement of Keith Corporation that follow a. Calculate the firm's net operating profit after taxes (NOPAT) for the year ended December 31, 2019 b. Calculate the firm's operating cash flow (OCF) for the year ended December 31, 2019 c. Calculate the firm's free cash flow (FCF) for the year ended December 31, 2019 d. Interpret, compare and contrast your cash flow estimate in parts (b) and (c) a. The net operating profit after taxes is $ (Round to the nearest dollar) b. The operating cash flow (OCF) is $ . (Round to the nearest dollar.) c. The firm's free cash flow (FCF) is $ . (Round to the nearest dollar) d. Interpret, compare and contrast your cash flow estimate in parts (b) and (c). (Select all that apply) A. Keith Corporation has negative cash flows from operating activities. B. The OCF value is very meaningful because it shows that the cash flows from operations are adequate to cover both operating expense plus Investment in fixed and current assets. C. The FCF value is very meaningful because it shows that the cash flows from operatios are adequate to cover both operating expense plus investment in fixed and current asset D. Depreciation is approximately the same size as net operating profit after tax, so the operating cash flow is about twice the NOPAT E. Keith Corporation has positive cash flows from operating activities.

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

E W @ E Ta 1x 9 ENG 01:31 16-03-2020 ... o X LL705 x fix : U Formula Bar LI LK LL LM EN LO Formula Bar LQ LR LS LT LU LVA KEITH 684 685 686 687 688 689 690 a a NOPAT =EBIT(1-t) = 2650*(1-0.21) = 2093.50 2094 [rounded] OPERATING CASH FLOW = NOPAT + DEPRECIATION = 3694 [rounded] 3693.50 [2093.50 + 1600] 691 692 693 FCF = OCF - NET FIXED ASSET INVESTMENT - NET CURRENT ASSET INVESTMENT FCF = 3693.50 - 1410 -1360 = 923.50 694 924 [rounded] NOTE 695 696 697 698 699 Net fixed asset investment = change in net fixed assets + depreciation Net fixed asset investment = ( 14860 - 15050 ) + 1600 = 1410 Net current asset investment = change in current assets - change in (accounts payable and accruals) Net current asset investment = (8180 - 6860) - ((1630 +210) - (1540 +340)) 1360 NOTE 1360 d: C FCF IS MEANINGFULL AS IT SHOWS THAT OCF IS ABLE TO COVER OPERATING EXPENSES AS WELL INVESTMENT IN FIXED & CURRENT ASSETS 700 701 702 703 704 705 706 707 ... OCF CASH FLOW STATW FCF ARM, MSI,confidenceINDEX LOAN CURRENCY CROSS OVER GM HPRAM TAX HEDGING MONEY MARKET GROWTH SL ... + +