Finance: Free Cash Flow

1835 Words Mar 16th, 2013 8 Pages
inance COOPERATE FINANCE | Miss Afifa | | Assignment# 4 | | UMAIR ASIF11 March 2013 |

You submitted this Assignment on Sun 10 Mar 2013 7:21 PM PDT. You got a score of 85.00 out of 100.00. You can attempt again, if you 'd like.
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Please read all questions and instructions carefully. Note that you only need to enter answers in terms of numbers and without any symbols (including $, %, commas, etc.). Enter all dollars without decimals and all interest rates in percentage with up to two decimals. Read the syllabus for examples.The points for each question are listed in parentheses at the start of the question, and the total points for the entire assignment adds up to 100. You are strongly encouraged to use
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Question 5
(5 points) To get from net operating profits after tax (NOPAT) to free cash flows (FCF), you need to ADD back depreciation, SUBTRACT capital expenditures and ADD net working capital (i.e., current operating assets - current operating liabilities). (Free cash flow is another name for cash flows.) Your Answer | | Score | Explanation | False. | ✔ | 5.00 | Correct. You understand the nature of "capital." | True. | | | | Total | | 5.00 / 5.00 | |
Question Explanation

This is an important issue that makes you focus on differences between stocks and flows.
Question 6
(5 points) Last year your firm had revenue of $20 million, cost of goods sold (COGS) of $12 million, Selling, General, & Administration costs (SG&A) of $2 million, Account Receivables (AR) of $6 million, Account Payables (AP) of $4 million and Inventory of $4 million. What will be the free cash flow next/this year if you boost revenue 6% and AR 12%, while holding COGS growth to 3% and everything else remains the same as last year? (Assume no taxes and no new capital expenditures.) (You are encouraged to use a spreadsheet even for this specific type of question.) Your Answer | | Score | Explanation | 4170000 | ✘ | 0.00 | Review the basics; see template and references. | 6120000 | | | | 7240000 | | | | 5250000 |
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