3) How will an increase in invested capital (IC) in a given year affect free cash...
3) How will an increase in invested capital (IC) in a given year affect free cash flow (FCF) and ROIC if all other things are kept equal?
Homework Answers
Free cash flow =operating cash flow - investment in net working capital and net fixed asset
ROIC = net income /invested capital
With increase in invested capital ,free cash flow will decrease (as increased net investment is subtracted from operating cash flow to get free cash flow)
With increase in invested capital ,return on Invested capital will decrease as if we divide same numberator with increased denominator ,value will decrease .
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3) How will an increase in invested capital (IC) in a given year
affect free cash...
How does return on invested capital ( ROIC ) affect a company's cash flow?
How does return on invested capital ( ROIC ) affect a company's cash flow?
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1.-How does an increase in depreciation expense affect FCF(free cash flow) when a tax rate is 30%? Increases FCF Decreases FCF No impact on FCF 2.- All else equal, How does a depreciation schedule (eg. a 6-year schedule to a 4-year schedule) affect NPV when a tax rate is 30%? Increases NPV Decreases NPV No impact on NPV Not enough info.
1. How does return on invested capital (ROIC) affect a company's cash flow? Explain the relationship...
1. How does return on invested capital (ROIC) affect a company's cash flow? Explain the relationship between ROIC, growth, and cash flow. 2. If value is based on discounted cash flows, why should a company or investor analyze growth and ROIC? 3. Under what circumstances does growth destroy value?
1. How does return on invested capital (ROIC) affect a company's cash flow? Explain the relationship...
1. How does return on invested capital (ROIC) affect a company's cash flow? Explain the relationship between ROIC, growth, and cash flow. 2. If value is based on discounted cash flows, why should a company or investor analyze growth and ROIC? 3. Under what circumstances does growth destroy value?
The free cash flow(in millions) shown below are forecast by Parker& Sons.If the weighted average cos...
The free cash flow(in millions) shown below are forecast by Parker& Sons.If the weighted average cos of capital(WACC) is 11% and FCF is expected to grow at a rate of 5% after 2years.What is the year 0(Zero) value of operations in millions? Assume that the ROIC isexpected to remain constant in Year 2 and beyond.(and do not make any half year adjustments) Year 1 2 FCF -$50 $100
5. Free cash flow and financial statements Aa Aa The primary objective of the corporate management team is to maximize shareholder wealth. The company's board of directors and the shareholders ev...
5. Free cash flow and financial statements Aa Aa The primary objective of the corporate management team is to maximize shareholder wealth. The company's board of directors and the shareholders evaluate and review managerial actions based on the growth in the value of the irm Based on your understanding of what determines a firm's value, review the following: What does the value of a firm depend on? The ability to generate cash flow that is available to distribute to the...
free cash flow 1-3. Free Cash Flow; WACC; NPV (3 questions) 2016 2015 2017 2018 2019...
free cash flow
1-3. Free Cash Flow; WACC; NPV (3 questions) 2016 2015 2017 2018 2019 2020 2021 M&A 1 2 Revenue 142343 152235 106364 144978 186152 205309 213635 EBIT+After Tax 4225 4522 2214 3214 3621 4314 5835 Capital Expenditure Dep. & Amortization Net Working Capital Change 1823 1088 1657 1577 2606 2395 3123 575 437 622 1026 1066 1045 1087 -4808 6090 1539 903 1689 1758 Free Cash Flow -4342 3382 7785 1044 1178 Other information Your Investment in...
free cash flow; wacc, npv. please show work 1-3. Free Cash Flow; WACC; NPV (3 questions)...
free cash flow; wacc, npv. please show work
1-3. Free Cash Flow; WACC; NPV (3 questions) 2015 2016 2017 2018 2021 Revenue EBIT + After Tax Capital Expenditure Dep. & Amortization Net Working Capital Change Free Cash Flow 142343 152235 106364 452242252214 1577 1823 1088 437 575 622 144978 3214 1657 1026 2019 2020 M&A 186152 205309 36214314 2606 2395 1066 1045 213635 5835 3123 1087 0 3382 4808 6090 77854342 1689 1539 1044 903 1178 1758 Other information Your...
AK Company A expects to have free cash flow (FCF) this year of $1,000,000. FCF is...
AK Company A expects to have free cash flow (FCF) this year of $1,000,000. FCF is expected to grow at a constant rate of 3%. If Company A has a Weighted average cost of capital of 7% (required rate), debt of $9,000,000, no preferred stock and 400,000 shares of common equity outstanding, what is the value per share? 58.20 40.00 26.88 25.00 65.75
Task 3: The company financials are given below: Net income €200m Depreciation expense €72m Interest expense...
Task 3: The company financials are given below: Net income €200m Depreciation expense €72m Interest expense €120m Increase in net working capital investment €32m Increase in fixed capital investment €136m Market value of debt €1,440m Cost of debt 8.5% Cost of equity 14% Tax rate 20% Constant growth rate of free cash flow (forecasted) 4% (per year) Capital Structure: Debt 40% Equity 60% Number of shares outstanding 20,000,000 Find the following: 1. Free cash flow to firm (actual), Free cash flow...
5. Free cash flow and financial statements Aa Aa The primary objective of the corporate management team is to maximize shareholder wealth. The company's board of directors and the shareholders evaluate and review managerial actions based on the growth in the value of the irm Based on your understanding of what determines a firm's value, review the following: What does the value of a firm depend on? The ability to generate cash flow that is available to distribute to the...
free cash flow
1-3. Free Cash Flow; WACC; NPV (3 questions) 2016 2015 2017 2018 2019 2020 2021 M&A 1 2 Revenue 142343 152235 106364 144978 186152 205309 213635 EBIT+After Tax 4225 4522 2214 3214 3621 4314 5835 Capital Expenditure Dep. & Amortization Net Working Capital Change 1823 1088 1657 1577 2606 2395 3123 575 437 622 1026 1066 1045 1087 -4808 6090 1539 903 1689 1758 Free Cash Flow -4342 3382 7785 1044 1178 Other information Your Investment in...
free cash flow; wacc, npv. please show work
1-3. Free Cash Flow; WACC; NPV (3 questions) 2015 2016 2017 2018 2021 Revenue EBIT + After Tax Capital Expenditure Dep. & Amortization Net Working Capital Change Free Cash Flow 142343 152235 106364 452242252214 1577 1823 1088 437 575 622 144978 3214 1657 1026 2019 2020 M&A 186152 205309 36214314 2606 2395 1066 1045 213635 5835 3123 1087 0 3382 4808 6090 77854342 1689 1539 1044 903 1178 1758 Other information Your...
AK Company A expects to have free cash flow (FCF) this year of $1,000,000. FCF is expected to grow at a constant rate of 3%. If Company A has a Weighted average cost of capital of 7% (required rate), debt of $9,000,000, no preferred stock and 400,000 shares of common equity outstanding, what is the value per share? 58.20 40.00 26.88 25.00 65.75
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