A firm has earnings before interest and taxes (EBIT) of $55 million, depreciation of $9 million,...

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A firm has earnings before interest and taxes (EBIT) of $55 million, depreciation of $9 million, and a 40% tax rate. Its net fixed assets increase by $13 million. It spends $16 million to increase its current assets. It expects its accounts payable to increase by $3 million, its accruals to increase by $5 million, and its notes payable to increase by $4 million. The firm's current liabilities consist of only accounts payable, accruals, and notes payable. What is its free cash flow (FCF)? A firm has earnings before interest and taxes (EBIT) of $55 million, depreciation of $9 million, and a 40% tax rate. Its net fixed assets increase by $13 million. It spends $16 million to increase its current assets. It expects its accounts payable to increase by $3 million, its accruals to increase by $5 million, and its notes payable to increase by $4 million. The firm's current liabilities consist of only accounts payable, accruals, and notes payable. What is its free cash flow (FCF)?

Answer rating: 100% (QA)

To calculate the Free Cash Flow FCF we use the formula FCF EBIT1 Tax Rate Depreciation Capital Expen... View the full answer