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You are considering an investment in Fields and Struthers, Inc. and want to evaluate the firm's...

You are considering an investment in Fields and Struthers, Inc. and want to evaluate the firm's free cash flow. From the income statement, you see the Fields and Struthers earned an EBIT of 90 million, had a tax rate of 30 percent, and its depreciation expense increased by 44 million and spontaneous current liabilities increased by 36 million.
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Answer #1
Operating cashflow is = EBIT + Depreciation expense - (EBIT * Tax rate)
Operating cashflow is = (90+44-(90*0.30))
Operating cashflow is = $ 107 Million
Investment in operating capital = Fixed assets increased + Current assets increased - Current liabilities increased
Investment in operating capital = - $ 36 Million
Free cash flow = Operating cash flow - Investment in operating capital
Free cash flow = (107-(-36))
Free cash flow = $ 143 Million
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