Bartling Energy Systems recently reported $9,250 of sales, $5,750 of operating costs other than depreciation, and $700 of depreciation. The company had no amortization charges, it had $3,200 of outstanding bonds that carry a 5% interest rate, and its federal-plus-state income tax rate was 35%. In order to sustain its operations and thus generate sales and cash flows in the future, the firm was required to make $1,250 of capital expenditures on new fixed assets and to invest $300 in net operating working capital. By how much did the firm's net income exceed its free cash flow?
Bartling Energy Systems recently reported $9,250 of sales, $5,750 of operating costs other than
Sales = 9250
Operating cost other than depreciation = (5750)
Depreciation = (700)
Free Cash flow (FCFF)
= Net Income + Interest (1-t) – Net Investment- Net Change in Working capital
= Net Income + Interest (1-t) – [ Capex – Depreciation] – Net Change in Working capital
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