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

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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DataDyne Company reported EBIT of $590 million for the most recent fiscal year. Interest expense were $10 million and the current tax rate was 20%. The firm had depreciation expenses of $100 million and capital expenditures of $150 million. In addition, the firm did have a decrease in net working capital of $30 million. What is DataDyne's free cash flow?
The Dog House has sales of $502,000, and depreciation of $47,000. The firm is entirely equity-financed and has a profit margin of 5% and tax rate of 35%. What is the amount of the operating cash flow?
10. Intellus has long-term debt of $5 million, owners' equity of $7.75 million, current assets of $1 million, gross fixed assets of $20 million, and accumulated depreciation of $7 million. What is the firm's net working capital?
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Ehrlich & Czarnecki Consulting, Inc. recently reported the following information: Net income = $800,000 Sales = $4,200,000 Total Assets = $9.5 million Tax rate = 40% Interest expense = 20,000 Accounts Payable = 36,000 Notes Payable = 300,000 Accruals = 50,000 After-tax cost of capital = 11% What is the company’s EVA? $-296,358 $-223,540 $-452,391 $-488,029 None of the above is within $100 of the correct answer.
A firm has EBIT of $275 million, which is net of $52 million in depreciation. In addition, the firm had $81 million in capital expenditures and an increase in net working capital of $5 million. The firm's tax rate is 21 percent. The firm's FCF is closest (in millions) to:
Merton Analytics is considering changes in its working capital policies to improve its cash ﬂow cycle. Merton’s sales last year were $4,250,000 (all on credit), and its net proﬁt margin was 7%. Its inventory turnover was 7.5 times during the year, and its DSO was 41 days. Its annual cost of goods sold was $2,200,000. The ﬁrm had ﬁxed assets totaling $585,000. Merton’s payables deferral period is 42 days. Calculate Merton’s cash conversion cycle. Assuming Merton holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Suppose Merton’s managers believe the annual inventory turnover can be raised to 9.5 times without affecting sales. What would Merton’s cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 9.5 for the year?
2. (10 percent) Wukong Inc. recently reported operating income (EBIT) of $3.75 million, depreciation of S1.40 million, and had a tax rate of 40%. The firm's expenditures on fixed assets and net operating working capital totaled S0.8 million. How much was its free cash flow. in millions?
King Lyon has the following assets: Current assets Capital assets Total assets $3,280,000 8,150,000 $11,430,000 During 4 months of the year, current assets drop to $1,650,000 (total assets will then be $9,800,000). Its operating profit (EBIT) is expected to be $499,500. Its tax rate is 30 percent. Shares are valued at $20. Its capital structure is short-term financing at 3 percent and long-term financing of 30 percent equity, 70 percent debt at 4 percent. a. Calculate expected EPS if the firm is perfectly hedged. (Do not round intermediate calculations and round your final answer to 2 decimal places.) EPS $
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