Question

Pro Forma Income Statement for Ideko, 2005-2010 2009 Year 2005 2006 2007 2008 2010 Income Statement (000) 1 Sales 75,000 119,777 138,149 158,526 103,234 88,358 2 Cost of Goods Sold (16,000) (18,665) (21,593) (18,000) (21,622) (25,757) (24,808) (28,333) (32,193) (30,471) (35,834) (41,925) 84.407 3 Raw Materials 4 Direct Labor Costs 41,000 48,071 55,883 64,498 73.982 5 Gross Profit 6 Sales and Marketing 7 Administrative (11,250) (14,579) (13,500) (13,254) 16.250 20,238 (18,582) (31,705) (20,608) (23,356) (27,630) (16,769) (17,959) 24,373 28,393 (15.485) 32,094 21,816 8 EBITDA 9 Depréciation 10 EBIT (7,710) 24,383 (5,405) 16,411 (6,865) 17.508 (7678) (5,500) 10,750 (5,450) 14,788 20.715 (6,800) 10,708 (7,820) 12,895 (8,160) 11 Interest Expense (net) (75) (6,800) (6,800) 7,988 16.223 12 Pretax Income 10,675 9,611 (3,748) (4,513) 8,382 (5,678) 13 Income Tax (3,736) (2,796) (3,364) 6,247 10,545 14 Net Income 6,960 6,939 5,193 2008 2009 2010 Year 2006 2007 2.250 3,600 4,000 Increases in NWC 3,000 3,250 Capital Expenditures Net Borrowing 5,000 20,000 15,000 5,000 8,000 5,000 0 0 15,000 The free cash flow to the firm in 2008 is closest to: -5,005 -1,755 5,575 14,995 AMoving to another question will save this response.

Answer 1

Free cash Flow (2008) Amount In $ 000

Profit After Tax	6,960
ADD: Depreciation	6,865
LESS: Increase in Working Capital	(3,250)
LESS: Capital Expenditure	(20,000)
ADD: Net Borrowing	15,000
Free Cash Flow	5,575