This preview shows page 1. Sign up to view the full content.
Unformatted text preview: Therefore, ABCs 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, ABCs 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, ABCs EBITDA margin was 25%. Their trade capital to sales ratio was 30%, both trade capital and sales are measured at the end of 1998. ABCs tax rate is 40%. Required : Using both the operating and the financial definitions, find ABCs free cash flow for 1998. Solution...
View Full Document
- Spring '03