LG 2 P4-6 Finding operating and free cash flows Consider the following balance sheets and selected data from the income statement of Keith Corporation. 1,800 Keith Corporation Balance Sheets December 31 Assets 2015 2014 Cash $ 1,500 $ 1,000 Marketable securities 1,200 Accounts receivable 2,000 1,800 Inventories 2,900 2,800 Total current assets $ 8,200 $ 6,800 Gross fixed assets $29,500 $28,100 Less: Accumulated depreciation 14,700 13,100 Net fixed assets $14,800 $15,000 Total assets $23,000 $21,800 Liabilities and stockholders' equity Accounts payable Notes payable Accruals Total current liabilities Long-term debt Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 1,600 2,800 200 $ 4,600 5,000 $ 9,600 $10,000 3,400 $13,400 $23,000 $ 1,500 2,200 300 $ 4,000 5,000 $ 9,000 $10,000 2,800 $12,800 $21,800 142 PART 2 Financial Tools Keith Corporation Income Statement Data (2015) 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, 2015, using Equation 4.1. b. Calculate the firm's operating cash flow (OCF) for the year ended December 31, 2015, using Equation 4.3. c. Calculate the firm's free cash flow (FCF) for the year ended December 31, 2015, using Equation 4.4. d. Interpret, compare and contrast your cash flow estimates in parts b and c