In 2018, Maverick Manufacturing reported sales of $1177209.0, depreciation of $18,000, EBIT of $153037.0, and net...
In 2018, Maverick Manufacturing reported sales of $1177209.0, depreciation of $18,000, EBIT of $153037.0, and net income of $67207.0. If the tax rate was 40%, what is the firm's free cash flow? Dividends are paid out at 40% of earnings for the year. The firm has 25,000 common shares outstanding.
|
Maverick Manufacturing |
||
|
2017 |
2018 |
|
|
Assets |
||
|
Cash |
52000 |
56000 |
|
Short-term Investments |
24000 |
16000 |
|
Accounts Receivable |
164000 |
173000 |
|
Inventory |
214000 |
210000 |
|
Total Current Assets |
454000 |
455000 |
|
Net Fixed Assets (PP&E) |
305000 |
328000 |
|
Total Assets |
759000 |
783000 |
|
Liabilities & Owners' Equity |
||
|
Accounts Payable |
15180 |
31320 |
|
Accruals |
7590 |
15660 |
|
Notes Payable |
91080 |
70470 |
|
Total Current Liabilities |
113850 |
117450 |
|
Long Term Debt |
258060 |
237992 |
|
Total Liabilities |
371910 |
355442 |
|
Common Stock |
136620 |
140940 |
|
Retained Earnings |
250470 |
286618 |
|
Owners' Equity |
387090 |
427558 |
|
Total Liabilities & Owners' Equity |
759000 |
783000 |
| Fill in your answers below: | 2017 | 2018 |
| NOPAT | ||
| NOWC | ||
| Operating Capital | ||
| FCF | ||
Homework Answers
Free Cash flow for maverick = EBIT*(1-t) + Depreciation - Change in NWC - Capex
EBIT * (1-t) = 153037*(1-40%) = $ 91,822.2
Depreciation = 18,000
Change in NWC = NWC in 2018 - NWC in 2017 =(CA - CL) in 2018 - (CA- CL) in 2017 = (455000- 117450) - (454000- 113850) = -2600
Capex = Net fixed assets in 2018 - Net fixed assets in 2017 + Depreciation = (328000 - 305000 + 18,000) = 41,000
Now Free Cash flow = 91,822.2 + 18,000 - (-2600) - 41,000 = $ 71,422.2
Add Answer to:
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