You are considering an investment in Fields and Struthers, Inc., and want to evaluate the firm's free cash flow. From the income statement, you see that Fields and Struthers earned an EBIT of $64 million, had a tax rate of 30 percent, and its depreciation expense was $5 million. Fields and Struthers' gross fixed assets increased by $30 million from 2014 and 2015. The firm's current assets increased by $26 million and spontaneous current liabilities increased by $15 million. a. Calculate Fields and Struthers' operating cash flow for 2015. b. Calculate Fields and Struthers' investment in operating capital for 2015. c. Calculate Fields and Struthers' free cash flow for 2015.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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You are considering an investment in Fields and Struthers, Inc., and want to
evaluate the firm's free cash flow. From the income statement, you see that
Fields and Struthers earned an EBIT of $64 million, had a tax rate of 30 percent,
and its depreciation expense was $5 million. Fields and Struthers' gross fixed
assets increased by $30 million from 2014 and 2015. The firm's current assets
increased by $26 million and spontaneous current liabilities increased by $15
million.
a. Calculate Fields and Struthers' operating cash flow for 2015.
b. Calculate Fields and Struthers' investment in operating capital for 2015.
c. Calculate Fields and Struthers' free cash flow for 2015.
Transcribed Image Text:You are considering an investment in Fields and Struthers, Inc., and want to evaluate the firm's free cash flow. From the income statement, you see that Fields and Struthers earned an EBIT of $64 million, had a tax rate of 30 percent, and its depreciation expense was $5 million. Fields and Struthers' gross fixed assets increased by $30 million from 2014 and 2015. The firm's current assets increased by $26 million and spontaneous current liabilities increased by $15 million. a. Calculate Fields and Struthers' operating cash flow for 2015. b. Calculate Fields and Struthers' investment in operating capital for 2015. c. Calculate Fields and Struthers' free cash flow for 2015.
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