General accounting You are evaluating an investment in Summit Technologies and need todetermine the firm's free cash flow. From the income statement, you see thatSummit earned an EBIT of $34.5 million, paid taxes of $7.6 million, andreported depreciation expense of $9.2 million. Summit's gross fixed assetsincreased by $15.3 million from 2022 to 2023. The firm's current assetsincreased by $7.8 million and spontaneous current liabilities increased by $4.2million.What are Summit Technologies' operating cash flow, investment in operatingcapital, and free cash flow for 2023, respectively (in millions)?a. $34.5 million, $15.3 million, $19.2 millionb. $36.1 million, $18.9 million, $17.2 millionc. $36.1 million, $15.3 million, $20.8 milliond. $36.1 million, $18.9 million, $16.7 million

Step 1: Define Financial MetricsOperating Cash Flow (OCF) - The cash generated from operations after…

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Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 12P

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As a financial analyst, you have been tasked with evaluating Randy Watson Music's free cash flow. Based on the 2022 income statement, EBIT was $41 million, the tax rate was 21 percent, and its depreciation expense was $6 million. NOPAT gross fixed assets increased by $28 million from 2021 and 2022. The company's current assets increased by $18 million and current liabilities increased by $14 million. Calculate the operating cash flow (OCF) for 2022. (Enter your answer in millions of dollars.)
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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.
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