Ask Question
14 September, 13:49

A firm has sales of $690, EBIT of $300, depreciation of $40, and fixed assets increased by $265. If the firm's tax rate is 40 percent and there were no increases in net operating working capital, what is the firm's free cash flow?

+1
Answers (1)
  1. 14 September, 16:00
    0
    -$45

    Explanation:

    Given that,

    Sales = $690

    EBIT = $300

    Depreciation = $40

    Tax rate = 40%

    Fixed assets increased by $265.

    Firm's free cash flow:

    = Earnings after tax + Depreciation - Capital Expenditure

    = [EBIT * (1 - Tax rate) ] + $40 - $265

    = [$300 * (1 - 0.40) ] + $40 - $265

    = $180 + $40 - $265

    = - $45

    Therefore, the firm's free cash flow - $45.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “A firm has sales of $690, EBIT of $300, depreciation of $40, and fixed assets increased by $265. If the firm's tax rate is 40 percent and ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers