Question

Analysts calculated that Starbucks total free cash flow for the months ended in June 2017 was...

Analysts calculated that Starbucks total free cash flow for the months ended in June 2017 was $763 million. Its net income for the months ended in June 2017 was $692 million. From class, what is the definition of free cash flow? If you are considering an investment in SBUX, should you be more interested in free cash flow or net income?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Free cash flows, is the cash left over in the company after paying for all the operating expenses, capital expenditures and working capital expenses.

As an investor i would be more interested in the Free cash flows that a company is generating, the reasons being

  • Free cash flows are difficult to manipulate.
  • Free cash flows determines the cash balance of the company and since cash is king a compony which does not generate enough cash flows will not be surviving for long.

Since, Starbucks is generating higher cash flows i would be willing to invest in the company as the company's prospects looks positive.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Analysts calculated that Starbucks total free cash flow for the months ended in June 2017 was...
Analysts calculated that Starbucks total free cash flow for the months ended in June 2017 was $763 million. Its net income for the months ended in June 2017 was $692 million. From class, what is the definition of free cash flow? If you are considering an investment in SBUX, should you be more interested in free cash flow or net income?
AutoCar’s free cash flow was just FCF0 = $1.30. Analysts expect the company's free cash flow...
AutoCar’s free cash flow was just FCF0 = $1.30. Analysts expect the company's free cash flow to grow by 30% this year, by 10% in Year 2, and then at a constant rate of 5% in Year 3 and thereafter. The WACC for this company 9.00%. AutoCar has $4 million in short-term investments and $14 million in debt and 2 million shares outstanding. What is the best estimate of the stock's current intrinsic price? If the market price is $33...
Free Cash Flow You are considering an investment in Crew Cut, Inc. and want to evaluate...
Free Cash Flow You are considering an investment in Crew Cut, Inc. and want to evaluate the firm's free cash flow. From the income statement, you see that Crew Cut earned an EBIT of $23.15 million, paid taxes of $3.85 million, and its depreciation expense was $7.85 million. Crew Cut's gross fixed assets increased by $10.15 million from 2007 to 2008. The firm's current assets increased by $6.15 million and spontaneous current liabilities increased by $3.85 million. What is Crew...
Free Cash Flow You are considering an investment in Crew Cut, Inc. and want to evaluate...
Free Cash Flow You are considering an investment in Crew Cut, Inc. and want to evaluate the firm's free cash flow. From the income statement, you see that Crew Cut earned an EBIT of $23.08 million, paid taxes of $3.92 million, and its depreciation expense was $7.92 million. Crew Cut's gross fixed assets increased by $10.08 million from 2007 to 2008. The firm's current assets increased by $6.08 million and spontaneous current liabilities increased by $3.92 million. What is Crew...
Problem 2-11 Free Cash Flow (LG2-5) You are considering an investment in Fields and Struthers, Inc....
Problem 2-11 Free Cash Flow (LG2-5) 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 that Fields and Struthers earned an EBIT of $98 million, had a tax rate of 30 percent, and its depreciation expense was $9 million. Fields and Struthers’ gross fixed assets increased by $64 million from 2017 to 2018. The firm’s current assets increased by $52 million and spontaneous current...
For the year ended June 30, 2017, Cullumber Clothing Company has total assets of $81,000,000, ROA...
For the year ended June 30, 2017, Cullumber Clothing Company has total assets of $81,000,000, ROA of 10.00 percent, ROE of 16.00 percent, and a net profit margin of 9.00 percent. What are the company's net income and net sales? Calculate the firm’s debt-to-equity ratio. The company’s net income is $ net sales are $ and the firm’s debt-to-equity ratio is  %.
Accounting for Financial Management: Free Cash Flow The focus on traditional financial statements is -Select-marketaccountingreplacementItem 1...
Accounting for Financial Management: Free Cash Flow The focus on traditional financial statements is -Select-marketaccountingreplacementItem 1 data rather than cash flow. However, cash flow is important to investors, managers, and stock analysts. Therefore, decision makers and security analysts need to modify financial statement data provided to them. An important modification is the concept of free cash flow (FCF). Many analysts regard FCF as being the single and most important number that can be developed from the income statements, even more...
Free Cash Flow Valuation Dozier Corporation is a fast-growing supplier of office products. Analysts project the...
Free Cash Flow Valuation Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 5% rate. Dozier's weighted average cost of capital is WACC = 17%. Year 123 Free cash flow ($ millions)-$20$30$40 What is Dozier's horizon value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.) Enter your answers...
Free Cash Flow Valuation Dozier Corporation is a fast-growing supplier of office products. Analysts project the...
Free Cash Flow Valuation Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 5% rate. Dozier's weighted average cost of capital is WACC = 15%. Year 1 2 3 Free cash flow ($ millions) -$20 $30 $40 What is Dozier's horizon value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to...
Free Cash Flow Valuation Dozier Corporation is a fast-growing supplier of office products. Analysts project the...
Free Cash Flow Valuation Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 6% rate. Dozier's weighted average cost of capital is WACC = 13%. Year 1 2 3 Free cash flow ($ millions) -$20 $30 $40 What is Dozier's horizon value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT