Question: Our client, Help Me Inc., is considering going public. They have employed KHJ Consulting to explain to them how to calculate Cash Flows from Assets
Our client, Help Me Inc., is considering going public. They have employed KHJ Consulting to explain to them how to calculate Cash Flows from Assets (CFFA) for a publicly traded corporation. Assume Help Me Inc.: (a) plows-back 30% of its net income into the firm for reinvestment and (b) has a marginal tax rate of 40%. You are to create the necessary Balance Sheets and Income Statement and then calculate the annual Cash Flow from Assets (aka: CFFA or Free Cash Flows (FCF)). A constraint here, however, is that your CFFA0 must range between $20,000,000 and $25,000,000 annually. Make sure to highlight the cash flow identity, i.e. calculate CFFA both ways.
Said another way, you are to replicate and explain the relevant parts of the textbook, notes, and lectures associated with this question. Teach/explain the concept(s).
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
