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What is the free cash flow of a firm with revenues of $32 million, operating margin...

What is the free cash flow of a firm with revenues of $32 million, operating margin of 42.1%, net margin of 16.4%, tax rate of 15.3%, and reinvestment rate of 16.8%? Round to the nearest dollar.

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Answer #1

Operating profit = sales * operating margin

=32000000*42.1%

=13472000

Reinvestment = sales* reinvestment rate

=32000000*16.8%

5376000

Calcultion of free cash flow: (in Million)

Operating profit.............13472000

Less:[email protected]%.............-2061216

_____________________________________

Operating profit after tax......11410784

Less: reinvestment.................-5376000

_____________________________________

Free cash flow ....... .....................6034784

_____________________________________

So free cash flow is 6034784 dollars

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