Question

An analyst has compiled the following information regarding GFU, Inc. for 2014 EBIT=$62 million, taxes=$17 million...

An analyst has compiled the following information regarding GFU, Inc. for 2014

EBIT=$62 million, taxes=$17 million

Depreciation=$5 million

Gross fixed assets increased by $20 million

Current assets increased by $12 million

Accounts payable increased by $9 million

Accruals increased by $3 million

Calculate GFU Inc.’s OCF, IOC, and FCF for 2014.

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Answer #1
Calculate GFU Inc.’s OCF i.e.Operating Cash flow
In Millions
EBIT $62.00
Taxes -$17.00
Depreciation $5.00
Increase in Current Assets -$12.00
Increase in Accounts Payable $9.00
Increase in Accruals $3.00
Operating Cash flow (OCF) $50.00
Calculate GFU Inc.’s FCF i.e.Free Cash flow
Free Cash flow = Operating Cash flow - Increase in Gross fixed assets
Free Cash flow = $50 million - $20 million = $30 million
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