Question

Consider the following financial information pertaining to a firm in a particular year:

Rev	1,000
COGS	400
R&D	50
SGA (excl. Depr)	100
Depreciation	60
Interest Exp	20
Taxes	110
Dividends	130
Change in Inventory	-25
Change in Acct. Pay.	15
Change in Acct. Rec.	30
Change in Cash/Secu.	0
Plant & Equip (new)	225
Shares Issued	N/A
Change in Debt	N/A

a. Using this information, please calculate and report the following items:

Gross Profit
EBIT
NI
Operating CF
Investing CF
Free CF

b. Also, using only one sentence, remark on additional financing requirements (if any).

Answe

show your calculations

Answer 1

a)

Gross Profit = Rev - COGS = $1000 - $400 = $600

EBIT = Rev - (COGS + R&D + SGA + Dep.)

= $1000 - ($400 + $50 + $100 + $60)

= $1000 - $610

= $390

NI = Rev - (COGS + R&D + SGA + Dep. + Interest Exp. + Tax)

= $1000 - ($400 + $50 + $100 + $60 + $20 + $110)

= $1000 - $740

= $260

Operating Cash Flow :-

Net Income	$260
Add : Depreciation	$60
Less : Change in Inventory	($25)
Add : Change in Accounts Payable	$15
Add : Change in Account Receivable	$30
Operating Cash Flow	$340

Investing Cash Flow :-

Purchase of Plant & Equipment	$225
Investing Cash Flow	$225

Free Cash Flow :-

= Operating Cash Flow - Investing Cash Flow

= $340 - $225

= $115