Question

1. Given the following Financial Information Answer the following question:

   	2017	2018
   Cash	7,000	218,462
   Accounts Receivable	8,000	8,800
   Inventory	4,000	4,400
   Prepaid Assets	3,000	3,300
   Other Assets	1,000	1,100
   Total Current Assets	23,000	236,062
   Net PPE	80,000	14,000
   Intangibles	4,000	4,000
   Total Assets	107,000	254,062
   Accounts Payable	8,000	8,800
   Salary Payable	1,000	1,100
   Notes Payable	3,000	3,000
   Total Current Liabilities	12,000	12,900
   Long-Term Debt	50,000	50,000
   Total Liabilities	62,000	62,900
   Common Stock	70,000	70,000
   Retained Earnings	-25,000	121,162
   total equity	45,000	191,162

   	2018
   Sales	759,000
   COGS	432,630
   Gross Profit	326,370
   SG&A	11,000
   Other Operating Expenses	18,000
   Depreciation	8,000
   Interest	5,629
   Taxes	48,137
   Net Income	243,604
   dividends	97,442

   Calculate Free Cash Flow, given that CAPEX is $-66,000.00:

   		a. $521,106.38
   		b. $527,786.38
   		c. $96,781.52
   		d. $103,461.52

   please write out step by step on how this is done

Answer 1

Please Note that their is some error in this question.

As given, Capex= $ - 66,000

and Depreciation = $ 8000

Opening Balance of PPE = $ 80,000

Hence Closing Balance should be = $80,000 - 66000 - 8000

= $ 6,000

Hence, Capital Expenditure should be $ - 58000

Now , Free Cash Flow = Cash flow from operating Activities - Capital Expenditure

= 256533 + 66000 ( or 58000)

= $ 322533 ( or $ 314533)

Cash flow from Opening Activities

Net Income   243604

Add : Taxes 48137

Deprection 8000

Interest Expense   5629

Total 305370

Less : Decrease in Current assets   (1600)

( Except Cash)

Add : Increase in Current Liabilities 900

Total 304670

Less : Tax (48137)

cash from Operating Activities 256533