Question: (a) Calculate the free cash flow that Cloud DigiTech generated from operations in 2019 and 2020. With the aid of the above exhibit, explain a

(a) Calculate the free cash flow that Cloud DigiTech generated from operations in 2019 and 2020. With the aid of the above exhibit, explain a history of the FCF generated from 2014 to 2020.(15 marks)

(b) The firm earned its highest return on common equity(ROCE)in2017and2018whenits FCF was lowest and it earned a relatively low ROCE in 2020 when it generated a relatively high free cash flow. Explain this negative correlation between profitability and cash flow.? Will it always be the case? Justify your answer. (5 marks)

(c) Cloud DigiTech's 164 million shares traded at $29 each at the end of 2020 and the firm carried little net debt. Calculate cash flow ratios for the firm. What do they mean?

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