Question

Given the following Financial Information Answer the following question: 2017 2018 Cash 7,000 218,462 Accounts Receivable...

  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

Homework Answers

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

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