13. Bubba Ho-Tep Company reported net income of $290 million for the most recent fiscal year. The firm had depreciation expenses of $100 million and capital expenditures of $150 million. Although it had no interest expense, the firm did have an increase in net working capital of $30 million. What is Bubba Ho-Tep's free cash flow? A) $10 million B) $210 million C) $270 million D) $570 million

13. Bubba Ho-Tep Company reported net income of $290 million for the most recent fiscal year. The firm had depreciation expenses of $100 million and capital expenditures of $150 million. Although it had no interest expense, the firm did have an increase in net working capital of $30 million. What is Bubba Ho-Tep's free cash flow? A) $10 million B) $210 million C) $270 million D) $570 million

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 4P: Talbot Enterprises recently reported an EBITDA of $8 million and net income of $2.4 million. It had...

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The Berndt Corporation expects to have sales of 12 million. Costs other than depreciation are expected to be 75% of sales, and depreciation is expected to be 1.5 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. Berndts federal-plus-state tax rate is 40%. Berndt has no debt. a. Set up an income statement. What is Berndts expected net income? Its expected net cash flow? b. Suppose Congress changed the tax laws so that Berndts depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow? c. Now suppose that Congress changed the tax laws such that, instead of doubling Berndts depreciation, it was reduced by 50%. How would profit and net cash flow be affected? d. If this were your company, would you prefer Congress to cause your depreciation expense to be doubled or halved? Why?
Talbot Enterprises recently reported an EBITDA of $8 million and net income of $2.4 million. It had $2.0 million of interest expense, and its corporate tax rate was 40%. What was its charge for depreciation and amortization?
The Moore Corporation has operating income (EBIT) of 750,000. The companys depreciation expense is 200,000. Moore is 100% equity financed, and it faces a 40% tax rate. What is the companys net income? What is its net cash flow?
Carter Swimming Pools has $16 million in net operating profit after taxes (NOPAT) in the current year. Carter has $12 million in total net operating assets in the current year and had $10 million in the previous year. What is its free cash flow?
Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Stricklers sales last year were 3,250,000 (all on credit), and its net profit margin was 7%. Its inventory turnover was 6.0 times during the year, and its DSO was 41 days. Its annual cost of goods sold was 1,800,000. The firm had fixed assets totaling 535,000. Stricklers payables deferral period is 45 days. a. Calculate Stricklers cash conversion cycle. b. Assuming Strickler holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. c. Suppose Stricklers managers believe the annual inventory turnover can be raised to 9 times without affecting sale or profit margins. What would Stricklers cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 9 for the year?
Dollar Inc. recently reported operating income (EBIT) of $3.25 million, depreciation of $0.56 million, and had a tax rate of 40%. The firm's expenditures on fixed assets and net operating working capital totaled $0.37 million. How much was its free cash flow, in millions? $2.36 $1.93 $2.03 $2.14 $2.25
4. Thomas Plc generated $50 million in net income during the year on book equity of $300 million. The reported net income includes the 4% interest it earned on its cash balance of $100m.The company also reported $30 million of depreciation and $40 million of capital expenditures. Its non-cash working capital increased by $10 million, and debt increased by $10 million to $310 million. The cash balance at the end of the year was $115 million. If the cost of equity is 10%, and the tax rate is 25%, estimate a. Equity reinvestment rate.
4. Thomas Plc generated $50 million in net income during the year on book equity of $300 million. The reported net income includes the 4% interest it earned on its cash balance of $100m.The company also reported $30 million of depreciation and $40 million of capital expenditures. Its non-cash working capital increased by $10 million, and debt increased by $10 million to $310 million. The cash balance at the end of the year was $115 million. If the cost of equity is 10%, and the tax rate is 25%, estimate a. Expected growth in net income for the company.
For the fiscal year just ended, Yoran Electronics had the following results: Net income 920,000; Depreciation expense 110,000; Increase in accounts payable 45,000; Increase in accounts receivable 73,000; Increase in marketable securities 40,000; Increase in deferred income tax liability 16,000; Decrease in Long-term debt 200,000. How much is the firm’s net cash flows from operating activities?
Vasudevan Inc. recently reported operating income of $2.80 million, depreciation of $1.20 million, and had a tax rate of 40%. The firm's expenditures on fixed assets and net working capital totaled $0.70 million. How much was its free cash flow, in millions? A. $3.93 B. $1.95 C. $2.94 D. $2.18 E. $2.50
Free Inc. has after tax operating income of $100 million. It is depreciation is $20million. The capital expenditure is $50million. Its NWC increase for $30 million, the excess cash increases for $5 million, and note payable decreases $1 million. What is the firm's free cash flow during the fiscal year in consideration (in million)? a)45 b)44 c)46 d)48
TSW Inc. had the following data for last year: Net income = $850; Net operating profit after taxes (NOPAT) = $700; Total assets = $2,800; and Total operating capital = $2,100. Information for the just-completed year is as follows: Net income = $1,200; Net operating profit after taxes (NOPAT) = $950; Total assets = $2,450; and Total operating capital = $2,350. How much free cash flow did the firm generate during the just-completed year? Group of answer choices $595 $770 $700 $630 $735