Question: Johnson Manufacturing recently reported $7,250,000 of sales, $1,875,000 of operating costs other than depreciation, and $1,150,000 of depreciation. The company had $200,000 of outstanding bonds that carry a 6.00% interest rate, and its federal-plus-state income tax rate was 30%. In order to sustain its operations and thus generate future sales and cash flows, the firm was required to spend $350,000 to buy new fixed assets and to invest $150,000 in net operating working capital. What was the firm's free cash flow?
Question: Johnson Manufacturing recently reported $7,250,000 of sales, $1,875,000 of operating costs other than depreciation, and $1,150,000 of depreciation. The company had $200,000 of outstanding bonds that carry a 6.00% interest rate, and its federal-plus-state income tax rate was 30%. In order to sustain its operations and thus generate future sales and cash flows, the firm was required to spend $350,000 to buy new fixed assets and to invest $150,000 in net operating working capital. What was the firm's free cash flow?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please solve this problem
Transcribed Image Text:Question:
Johnson Manufacturing recently reported $7,250,000 of sales, $1,875,000 of operating costs
other than depreciation, and $1,150,000 of depreciation. The company had $200,000 of
outstanding bonds that carry a 6.00% interest rate, and its federal-plus-state income tax rate was
30%. In order to sustain its operations and thus generate future sales and cash flows, the firm
was required to spend $350,000 to buy new fixed assets and to invest $150,000 in net operating
working capital.
What was the firm's free cash flow?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education