The company\'s net income for the year was $109 and it paid a cash dividend. It

Question

The company's net income for the year was $109 and it paid a cash dividend. It did not dispose of any property, plant, and equipment during the year. The company did not issue any bonds payable or repurchase any of its own common stock.

The free cash flow for the year was:

$38 $71 $285 $11 The company's net income for the year was $109 and it paid a cash dividend. It did not dispose of any property, plant, and equipment during the year. The company did not issue any bonds payable or repurchase any of its own common stock. The free cash flow for the year was:

Explanation / Answer

free cash flow =EBIT(1-Tax Rate) + Depreciation & Amortization - Change in Net Working Capital - Capital Expenditure

Net working capital in the beginning of year =28+45+49 -41 = 81

Net working capital in the endof year =29+53+52 -38 = 96

Change in Net Working Capital =96-81 = 15

free cash flow =109 +(159-156) -(15)-60 = 38

$38

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