. Baglioni Company. had the following data for 2018, in millions: Net income = $600; after-tax...
. Baglioni Company. had the following data for 2018, in millions: Net income = $600; after-tax operating income [EBIT(1 − T)] = $700; and Total assets = $2,000. Information for 2019 is as follows: Net income = $825; after-tax operating income [EBIT(1 − T)] = $910; total capital expenditure plus change in net operating working capital = $500; and depreciation and amortization of $15 . How much free cash flow did the firm generate during 2019?
Homework Answers
Answer:
Free Cash Flows for 2019 is given by the formula:
FCF = EBIT(1-T) - CAPEX - Changes in Net working capital + Non cash changes ( Deprcn & Amortization)
=> FCF of 2019 = $910 - $500 + $15 ( Since total capital expenditure plus change in net operating working capital = $500)
=> FCF = $425
The correct answer is $425
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