Unformatted text preview: Therefore, ABC’s interest expense for 1998 is the interest rate on short-term debt times short-term debt at the beginning of 1998 (end of 1997). Alternatively, if instead, ABC paid down any short-term debt during 1998, this was also done at the end of 1998. ABC has financed its business activity with short-term debt and with common equity. In 1998, ABC’s rate of return on equity (ROE) was 20%. ROE is calculated with equity at the end of 1998. ABC paid dividends of $26 during 1998. ABC had no share issues or share repurchases during 1998. Also in 1998, ABC’s EBITDA margin was 25%. Their trade capital to sales ratio was 30%, both trade capital and sales are measured at the end of 1998. ABC’s tax rate is 40%. Required : Using both the operating and the financial definitions, find ABC’s free cash flow for 1998. Solution...
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This note was uploaded on 02/10/2011 for the course BUS 312 taught by Professor Alan during the Spring '03 term at Simon Fraser.
- Spring '03