Question

You are an industry analyst for the energy sector. You are analyzing financial reports from two companies: Black Gold Corp. and New Energy Inc. Corporate tax for both firms is 35%. Your associate analyst has calculated and compiled in the following table, a list of important figures you need for the analysis:

	Black Gold Corp.	New Energy Inc.
EBIT	$     268,800	$         112,000
Depreciation	$       92,004	$           33,660
Total operating capital	$  1,224,000	$         636,480
Net investment in operating capital	$     612,000	$         265,200
WACC	11.85%	11.88%

What is the free cash flow and ROIC for New Energy Inc.?

Answer 1