Consider the balance sheets and selected data from the income statement of Keith Corporation that appear below and on shown below.

Keith Corporation Income Statement Data (2012)
Depreciation expense .................$1,600
Earnings before interest and taxes (EBIT) ......... 2,700
Interest expense ................... 367
Net profits after taxes ................. 1,400
Tax rate ..................... 40%
a. Calculate the firm's net operating profit after taxes (NOPAT) for the year ended December 31, 2012, using Equation 4.1.

NOPAT = EBIT × (1 - T) ............................................. (4.1)

b. Calculate the firm's operating cash flow (OCF) for the year ended December 31, 2012, using Equation 4.3.

OCF = [EBIT × (1 - T)] + Depreciation ....................... (4.3)

c. Calculate the firm's free cash flow (FCF) for the year ended December 31, 2012, using Equation 4.5.

NFAI = Change in net fixed assets + Depreciation ...... (4.5)

d. Interpret, compare, and contrast your cash flow estimates in parts b and c.

Keith Corporation Balance Sheets December 31 2012 2011 Assets Cash Marketable securities Accounts receivable Inventories S 1,500 1,000 1.200 1,800 2.900 2,800 1,800 2,000 S 8.200 6,800 Total current assets Gross fixed assets Less: Accumulated depreciation $29,500 $28,100 14700 13,100 Net fixed assets Total assets $14,800 $15.100 $15,100 $21,800 Liabilities and Stockholders' Equity Accounts payable Notes payable Accruals S 1,600 1,500 2,200 300 S 4,600 4,000 2,800 200 Total current liabilities Long-term debt 5,000 Total liabilities Common stock Retained earnings S9,600 9.000 S10,000 $10,000 3.400 2,800 13400 12,800 Total liabilities and stockholders equity 23.000 21.800 Total stockholders equity