Question

Calculate Net Operating Profit After Tax (NOPAT), Operating Cash Flow (OCF) and Free Cash Flow (FCF)...

Calculate Net Operating Profit After Tax (NOPAT), Operating Cash Flow (OCF) and Free Cash Flow (FCF) for Unlimited Masks Inc., with the following financial information:
- EBIT $20.2mm - Depreciation $3.6mm - Interest Expense $4.0mm - Capital Expenditures $2.5mm - Change in working capital $4.0mm - Tax rate 21%

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Answer #1

Profit After Tax (NOPAT) = Operating Income (1-Tax rate)

Operating income =EBIT

Profit After Tax (NOPAT) = $20.2mm*(1-0.21) =$15.958mm

Operating Cash Flow (OCF) = Net income + Depreciation - Changes in working capital

Net income = (EBIT-Interest)*(1-tax) = ($20.2mm-$3.6mm)*(1-0.21) = $13.114mm

Operating Cash Flow (OCF) = $13.114mm + $3.6mm - $4.0mm = $12.714mm

Free Cash Flow (FCF) = OCF - Capital expenditure

Free Cash Flow (FCF) = $12.714mm-$2.5mm = $10.214mm

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