Question

A firm reported frer cash flow of 430 million and operating income of 390 million. a)...

A firm reported frer cash flow of 430 million and operating income of 390 million.
a) By how much did its net operating assets change?
b) the firm invested 29 million cash in new operating assets. What were its operating accruals?
c) the firm incurred net expenses of 43 million after tax, paid a dividend of 20 million, raised 33 milion from share issues. What is the change in net debt?
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Answer #1
a)
Free Cash Flow = C - I $430.00 Million
Operating Income = OI $390.00 Million
Change in net operating income ?NOA
??NOA = OI - (C - I) = $390 - $430 -$40.00 Million
The firm reduced its investment in net operating assets.
b)
Investments = I $29.00 Million
OI = C - I + I + operating accruals
Operating accruals = OI - (C - I) + I
Operating accruals = $390 - $430 - $29 -$69.00 Million
or
Operating accruals = ?NOA - I
Operating accruals = -$40 - $29 -$69.00 Million
c)
Net Financial Expenses (NFE) $43.00 Million
Net dividend (d) = $20 - $33 Million -$13.00 Million
??NFO = NFE + d - (C - I)
??NFO = $43 - 13 - $430 Million -$400.00 Million
The net debt has reduced by reducing NFO -$400 Million by applying free cash flow and the net dividend
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