comprehensive test

comprehensive test - 1. You are considering an investment...

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1 . You are considering an investment in Fields and Struthers, Inc. and want to evaluate the firm's free cash flow. From the income statement, you see that Fields and Struthers earned an EBIT of $52 million, paid taxes of $10 million, and its depreciation expense was $5 million. Fields and Struthers' gross fixed assets increased by $38 million from 2007 to 2008. The firm's current assets increased by $20 million and spontaneous current liabilities increased by $12 million. Calculate Fields and Struthers' operating cash flow (OCF), investment in operating capital (IOC) and free cash flow (FCF) for 2008. OCF = $42,000,000; IOC = $37,000,000; FCF = $5,000,000 OCF = $47,000,000; IOC = $37,000,000; FCF = $10,000,000 OCF = $42,000,000; IOC = $46,000,000; FCF = -$4,000,000 OCF = $47,000,000; IOC = $46,000,000; FCF = $1,000,000 OCF = EBIT - Taxes + Depreciation = ($52M - $10M + $5M) = $47M 2. You are considering an investment in Fields and Struthers, Inc. and want to evaluate the firm's free cash flow. From the income statement, you see that Fields and Struthers earned an EBIT of $52 million, paid taxes of $14 million, and its depreciation expense was $5 million. Fields and Struthers' gross fixed assets increased by $34 million from 2007 to 2008. The firm's current assets increased by $20 million and spontaneous current liabilities increased by $14 million. Calculate Fields and Struthers' operating cash flow(OCF), investment in operating capital (IOC) and free cash flow (FCF) for 2008. OCF = $43,000,000; IOC = $37,000,000; FCF = $6,000,000 OCF = $47,000,000; IOC = $37,000,000; FCF = $10,000,000 OCF = $43,000,000; IOC = $40,000,000; FCF = $3,000,000 OCF = $49,000,000; IOC = $46,000,000; FCF = $3,000,000 OCF = EBIT - Taxes + Depreciation = ($52M - $14M + $5M) = $43M 3. Tater and Pepper Corp. reported free cash flows for 2008 of $20 million and investment in operating capital of $15 million. Tater and Pepper listed $8 million in depreciation expense and $12 million in taxes on its 2008 income statement. Calculate Tater and Pepper's 2008 EBIT. $49,000,000 $42,000,000 $39,000,000 $47,000,000 FCF = Operating cash flow - Investment in operating capital; $20M = X - $15M; X = $35M OCF = EBIT - Taxes + Depreciation; $35M = (EBIT - $12M + $8M); EBIT = $39M
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4. Mr. Husker's Tuxedos, Corp. began the year 2008 with $205 million in retained earnings. The firm earned net income of $30 million in 2008 and paid $5 million to its preferred stockholders and $12 million to its common stockholders. What is the year-end 2008 balance in retained earnings for Mr. Husker's Tuxedos? $193,000,000 $200,000,000 $213,000,000 $218,000,000 $205M + $30M - $5m - $12M = $218M 5. Mr. Husker's Tuxedos, Corp. began the year 2008 with $105 million in retained earnings. The firm earned net income of $22 million in 2008 and paid $2 million to its preferred stockholders and $7 million to its common stockholders. What is the year-end 2008 balance in retained earnings for Mr. Husker's Tuxedos? $118,000,000
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This document was uploaded on 10/29/2011 for the course FIN 320 at Jackson State.

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comprehensive test - 1. You are considering an investment...

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