Income Statement 2012 S 5,250,000 2,173,000 Sales Costs Other expenses Depreciat
ID: 2589580 • Letter: I
Question
Income Statement 2012 S 5,250,000 2,173,000 Sales Costs Other expenses Depreciation expense EBIT Interest expense EBT Taxes Net income 67,400 179,000 s 2,830,600 85,555 2.745,045 89,D00 2.656,045 169,000 2,487,045 Dividends Addition to retained earnings Life's Good Corp. also issued $106.700 in new equity during the year and redeemed 565,300 im outstanding longtern debt Calculaie the operating cash flow for the firm (2 marks) a a Calculate the cush how to creditossx (2 marks) Calculate she cash tleow to stockholders. (2 marks) wgl Define free cash flow (FCF) and state one of the equations for computing FCF 3 marks)Explanation / Answer
Operating cash flow = EBIT + depreciation - tax
= 2830600+179000-89000
=$2920600
Cash flow to creditors = Interest paid + decline in long term debt
= 85555 + 65300
=$150855
Cash flow to Stockholders = Dividend - equity issued
= 169000 - 106700
= $62300
Free cash flow = net operating cash flow - capital expenditure
Here in this question there is no capital expenditure
So free cash flow is same as net operating cash flow.
So free cash flow = $2920600
Equation for free cash flow = sales revenue - operating cost and taxes - required investment in operating capital
Or net operating profit after tax - net investment in operating capital