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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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