Finding operating and free cash flows Consider the balance sheets and selected data from the income statement of Keith Corporation that follow E a. Calculate the firm's net operating profit after taxes (NOPAT) for this year. b. Calculate the firm's operating cash flow (OCF) for the year. c. Calculate the firm's free cash flow (FCF) for the year. d. Interpret, compare and contrast your cash flow estimate in parts (b) and (c). a. The net operating profit after taxes is $. (Round to the nearest dollar.) b. The operating cash flow (OCF) is $. (Round to the nearest dollar.) c. The firm's free cash flow (FCF) is S (Round to the nearest dollar.) d. Interpret, compare and contrast your cash flow estimate in parts (b) and (c). (Select all that apply.) A. Depreciation is approximately the same size as net operating profit after tax, so the operating cash flow is about twice the NOPAT. B. The FCF value is very meaningful because it shows that the cash flows from operations are adequate to cover both operating expense plus investment in fixed and current assets. C. The OCF value is very meaningful because it shows that the cash flows from operations are adequate to cover both operating expense plus investment in fixed and current assets. D. Keith Corporation has negative cash flows from operating activities. E. Keith Corporation has positive cash flows from operating activities. Income Statement Data (This year) Depreciation expense Earnings before interest and taxes (EBIT) Interest expense Net profits after taxes Tax rate $1,520 2.750 375 1,876 21% A B 1 1 Assets This year Last year 2 Cash $1,460 $970 3 Marketable securities 1850 1230 4 Accounts receivable 1990 1820 5 Inventories 2860 2810 6 Total current assets $8,160 $6,830 7 Gross fixed assets $29,480 $28,060 8 Less: Accumulated depreciation 14660 13140 9 Net fixed assets $14,820 $14,920 10 Total assets $22,980 $21,750 11 Liabilities and Stockholders' Equity 12 Accounts payable $1,620 $1,520 13 Notes payable 2830 2220 14 Accruals 230 330 15 Total current liabilities $4,680 $4,070 16 Long-term debt $4,980 $4,880 17 Common stock $9,960 $9,960 18 Retained earnings 3360 2840 19 Total stockholders' equity $13,320 $12,800 20 Total liabilities and stockholders' equity $22,980 $21,750