You are considering an investment in Fields and Struthers, Incorporated, and want to evaluate the firm's free cash flow. From theincome statement, you see that Fields and Struthers earned an EBIT of $62 million, had a tax rate of 21 percent, and its depreciationexpense was $6 million. Fields and Struthers's gross fixed assets increased by $32 million from last year to this year. The firm's currentassets increased by $24 million and spontaneous current liabilities increased by $14 million.Calculate Fields and Struthers's NOPAT.Note: Enter your answer in millions of dollars rounded to Calculate Fields and Struthers's operating cash flow.Note: Enter your answer in millions of dollars rounded to 2 decimal places. (i.e., Enter 5,500,000 as 5.50.)Answer is complete but not entirely correct.Operating cash flow$44.98 millionCalculate Fields and Struthers's investment in operating capital.Note: Enter your answer in millions of dollars. (i.e., Enter 10,000,000 as 10.)Answer is complete but not entirely correct.Investment in operating capital $32 million

Operating cash flow [ OCF] :OCF is the cash profit generated from operational activities.It is…

Answered: You are considering an investment in…

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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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?
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Company XYZ, an all-equity firm, reported incremental revenues (net income) of $336 million for the most recent year. The firm had depreciation expenses of $141 million and capital expenditures of $196 million. The company also had an increase in net working capital of $20 million. What is the free cash flow? Enter your answer in dollars and round to the nearest dollar.
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?
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Renew Life Industries has an EBIT of $28 million, depreciation of $3 million and a tax rate of 38%. Renew Life invests $8 million in fixed assets and $13 million to increase current assets. Accounts payable is expected to increase by $3 million, accruals total $2 million, and liabilities increase to $6 million. Determine the available cash flow.
RJS generated $78,000 net income this year. The firm's financial statements also show that its interest expense was $40,000, its marginal tax rate was 35 percent, and its invested capital was $1,000,000. If its average cost of funds is 11 percent, what was RJS's economic value added (EVA) this year? Round your answer to the nearest dollar. Use a minus sign to enter a negative value, if any. $ _______
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