Casey’s Hot Dogs, Inc. just completed it 2016 financial statements. Casey’s had
ID: 2781390 • Letter: C
Question
Casey’s Hot Dogs, Inc. just completed it 2016 financial statements. Casey’s had revenues of $16,343, and depreciation expense of $1,364, and a corporate tax rate of 38 percent. Casey’s COGS are 70 percent of revenues. A list of some balance sheet items for Casey’s for the end of fiscal years 2015 and 2016 is as below: 2015 2016 2015 2016 Current Assets $1,300 $1,551 Current Liabilities $1,200 $1,350 Fixed Assets, net $5,500 $6,200 Long-Term Debt $5,100 $5,350 What is Casey’s free cash flow (FCF) for 2016?
Explanation / Answer
Revenue=$16343
COGS=$16343×.7=$11440
Net income=$(16343-11440-1364)×.62=$3539
Change in WC Investment=Change in Current assets-Change in Current liabilities=$(1300-1551)-(1200-1350)=$-101
Capital expenditure=6200-5500=700
Change in debt=$(5350-5100)=$250.
FCF= Net income +Depreciation-FCInv-WCInv=$3539+1364-700+101=$4304.
Thank you.