Cash flow from assets (CFFA) is also known as “Free cash flow” (FCF). CFFA (or FCF) is calculated by adding Net Income to Depreciation and Interest Expense, then subtracting capital expenditures for the period, and then subtracting any increases in net working capital required to keep the operation running and growing in accord with plans. NOW SUPPOSE that your business had 25,000 in Net Income; 1,400 in Depreciation Expense; 1,500 in Capital Expenditures; 7,500 in Interest Expense; and your Net Working Capital account was required to increase by 500. FIND: CFFA The answer I came up with was 32,400. Is that correct?
Cash flow from assets (CFFA) is also known as “Free cash flow” (FCF). CFFA (or FCF) is calculated by adding Net Income to Depreciation and Interest Expense, then subtracting capital expenditures for the period, and then subtracting any increases in net working capital required to keep the operation running and growing in accord with plans. NOW SUPPOSE that your business had 25,000 in Net Income; 1,400 in Depreciation Expense; 1,500 in Capital Expenditures; 7,500 in Interest Expense; and your Net Working Capital account was required to increase by 500. FIND: CFFA The answer I came up with was 32,400. Is that correct?
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
ChapterMB: Model-building Problems
Section: Chapter Questions
Problem 14M
Related questions
Question
- Cash flow from assets (CFFA) is also known as “
Free cash flow ” (FCF). CFFA (or FCF) is calculated by adding Net Income toDepreciation and Interest Expense, then subtracting capital expenditures for the period, and then subtracting any increases in net working capital required to keep the operation running and growing in accord with plans. NOW SUPPOSE that your business had 25,000 in Net Income; 1,400 in Depreciation Expense; 1,500 in Capital Expenditures; 7,500 in Interest Expense; and your Net Working Capital account was required to increase by 500. FIND: CFFA - The answer I came up with was 32,400. Is that correct?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,