Question

Check my work You are considering an investment in Fields and Struthers, Inc. and want to evaluate the firm's free cash flow. From the income statement, you see that Fields and Struthers earned an EBIT of $62 million, had a tax rate of 30 percent, and its depreciation expense was $5 million. Fields and Struthers' gross fixed assets increased by $32 million from 2017 to 2018. The firm's current assets increased by $20 million and spontaneous current liabilities increased by $12 million. Calculate Fields and Struthers' operating cash flow for 2018. (Enter your answer in millions of dollars rounded to 1 decimal place.) Operating cash flow million Calculate Fields and Struthers' investment in operating capital for 2018. (Enter your answer in millions of dollars.) Investment in operating capital million Calculate Fields and Struthers' free cash flow for 2018. (Enter your answer in millions of dollars rounded to 1 decimal place.) Free cash flow million

Answer 1

А 20 Operating cash flow 2018 21 ebit*(1-tax rate)+depreciation-change in working capital =62*(1-30%)+5-20-12) 40.4 million 25 increased operating capital 2018 26 increase current assets-increased current liability =20-12 8 million 30 Free cash flow 2018 31 ocf-increase in fixed assets =40.4-32 8.4 million

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