Question

# The 2018 income statement for Duffy’s Pest Control shows that depreciation expense was \$191 million, EBIT...

The 2018 income statement for Duffy’s Pest Control shows that depreciation expense was \$191 million, EBIT was \$492 million, and the tax rate was 35 percent. At the beginning of the year, the balance of gross fixed assets was \$1,562 million and net operating working capital was \$411 million. At the end of the year, gross fixed assets was \$1,803 million. Duffy’s free cash flow for the year was \$405 million.

Calculate the end-of-year balance for net operating working capital. (Enter your answer in millions of dollars rounded to 1 decimal place.)

 Free cash flows 405 Net income before tax 492 Less: tax @ 35% 172.2 Earnings after tax 319.8 Add: Depreciation 191 Cash from Operations 510.8 Capital spending on Fixed assets -241 (1803-1562) Decrease in Net working capital = Fress cashflows -cash from Operations + Capital spending in fixed assets 405 -510.8 +241 = 135.2 Net Working capital at the end: Net Working capital in the beginning 411 million Less: Decraese in Wworking capital -135.2 million Net Working capital at the end: 275.8 million Answer is \$ 275.8 million