A company has EBIT of P30,000,000, depreciation of P5,000,000, and a 40% tax rate. It needs to spend P10,000,000 on new fixed assets and P15,000,000 to increase its currents assets. It expects its accounts payable to increase by P2,000,000, its accounts to increase by P3,000,000, and its notes payable to increase by P8,000,000. The firm’s current liabilities consist of only accounts payable, accruals and notes payable. What is its free cash flow?

A company has EBIT of P30,000,000, depreciation of P5,000,000, and a 40% tax rate. It needs to spend P10,000,000 on new fixed assets and P15,000,000 to increase its currents assets. It expects its accounts payable to increase by P2,000,000, its accounts to increase by P3,000,000, and its notes payable to increase by P8,000,000. The firm’s current liabilities consist of only accounts payable, accruals and notes payable. What is its free cash flow?

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 10P: The Moore Corporation has operating income (EBIT) of 750,000. The companys depreciation expense is...

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