Essentials of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
9th Edition
ISBN: 9781259277214
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 12QP
Summary Introduction
To calculate: The operating cash flow.
Introduction:
Operating cash flow refers to the cash flow from operating activities or primary activities of the firm.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Refer to the financial statements and related disclosure notes of The Kroger Company for the fiscal year endingJanuary 30, 2016. You can locate the report online from “investor relations” at www.kroger.com.Notice that Kroger’s net income has increased over the three years reported. To supplement their analysis ofprofitability, many analysts like to look at “free cash flow.” A popular way to measure this metric is “structuralfree cash flow” (or as Warren Buffett calls it, “owner’s earnings”), which is calculated as net income from operations, plus depreciation and amortization, minus capital expenditures.Required:Determine free cash flows for Kroger in each of the three years reported. Compare that amount with net incomeeach year. What pattern do you detect?
Cash flow from assets. Use the data from the following financial statements in the popup window,
LOADING.... The company paid interest expense of $18,000 for 2017 and had an overall tax rate of
40 % 40% for 20172017. Find the cash flow from assets for 20172017, and break it into its three parts:
operating cash flow, capital spending, and change in net working capital.
Question content area bottom
Part 1
The operating cash flow is: $ _______ ?
Need help with this question
Chapter 2 Solutions
Essentials of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 2.1 - Prob. 2.1ACQCh. 2.1 - Prob. 2.1BCQCh. 2.1 - What do we mean by financial leverage?Ch. 2.1 - Explain the difference between accounting value...Ch. 2.2 - What is the income statement equation?Ch. 2.2 - What are the three things to keep in mind when...Ch. 2.2 - Why is accounting income not the same as cash...Ch. 2.3 - What is the difference between a marginal and an...Ch. 2.3 - Do the wealthiest corporations receive a tax break...Ch. 2.4 - Prob. 2.4ACQ
Ch. 2.4 - Prob. 2.4BCQCh. 2.4 - Why is interest paid not a component of operating...Ch. 2 - What is the relationship between current assets...Ch. 2 - What is the purpose of the income statement?Ch. 2 - Prob. 2.3CCh. 2 - Prob. 2.4CCh. 2 - Liquidity. What does liquidity measure? Explain...Ch. 2 - Accounting and Cash Flows. Why is it that the...Ch. 2 - Book Values versus Market Values. In preparing a...Ch. 2 - Prob. 4CTCRCh. 2 - Prob. 5CTCRCh. 2 - Prob. 6CTCRCh. 2 - Prob. 7CTCRCh. 2 - Net Working Capital and Capital Spending. Could a...Ch. 2 - Prob. 9CTCRCh. 2 - Firm Values. Referring back to the examples used...Ch. 2 - Building a Balance Sheet. Bear Tracks, Inc., has...Ch. 2 - Building an Income Statement. Pharrell, Inc., has...Ch. 2 - Dividends and Retained Earnings. Suppose the firm...Ch. 2 - Per-Share Earnings and Dividends. Suppose the firm...Ch. 2 - Prob. 5QPCh. 2 - Tax Rates. In Problem 5, what is the average tax...Ch. 2 - Calculating OCF. Hailey, Inc., has sales of...Ch. 2 - Prob. 8QPCh. 2 - Calculating Additions to NWC. The December 31,...Ch. 2 - Cash Flow to Creditors. The December 31, 2015,...Ch. 2 - Cash Flow to Stockholders. The December 31, 2015,...Ch. 2 - Prob. 12QPCh. 2 - Market Values and Book Values. Klingon Widgets,...Ch. 2 - Prob. 14QPCh. 2 - Using Income Statements. Given the following...Ch. 2 - Prob. 16QPCh. 2 - Prob. 17QPCh. 2 - Prob. 18QPCh. 2 - Net Income and OCF. During the year, Belyk Paving...Ch. 2 - Prob. 20QPCh. 2 - Prob. 21QPCh. 2 - Prob. 22QPCh. 2 - Prob. 23QPCh. 2 - Net Fixed Assets and Depreciation. On the balance...Ch. 2 - Tax Rates. Refer to the corporate marginal tax...Ch. 2 - Prob. 1CCCh. 2 - Prob. 2CC
Knowledge Booster
Similar questions
- C) Obtain the cash flows from assets projected for 2025 D) What can you say about the firm's growth plans?arrow_forwardQuestion 3: Study the following financial statements. What was NOWC for 2017 and 2018? Show the calculation and circle your answer. Assume that all cash is excess cash; i.e., this cash is not needed for operating purposes. Calculate the Free Cash Flow in 2018. Show the calculation and circle your answer. What was 2018 EVA? Show the calculation and circle your answer. Assume that its after-tax cost of capital is 10%. What was MVA at the year-end 2018? Show the calculation and circle your answer. (Note: Share Price is $25)arrow_forwardPlease give answer the questionarrow_forward
- Use the financial statements supplied below for International Motor Corporation(IMC) to answer the following questions. Calculate the cash conversion cycle for IMC for both 2015 and 2016. What change has occurred, if any? All else being equal, how does this change affect IMC’s need for cash? IMC’s suppliers offer terms of Net 30. Does it appear that IMC is doing a good job of managing its accounts payable?arrow_forwardSuppose Nippon Technology had the following cash flow results for 2022: Net Cash Flow from Operating Activities of $8,400,000 Net Cash Flow from Investing Activities of -$1,300,000 Net Cash Flow from Financing Activities of $4,000,000 Create a statement of cash flows with amounts in thousands. What is the Net Cash Flow?arrow_forwardAssume a firm generates $2,200 in slaes and has a $300 increase in accounts recieveables during an accoutning period. Based soley on this information, cash flow will increase by ? Please explain.arrow_forward
- Suppose the risk of the company changes based on an unanticipated decrease in the Free Cash Flows by 10% annually during the years 2015, 2016, and 2017. What are the implications of the change in present value based on risk? In other words, what does the change mean to the company, and how would a financial manager interpret it?arrow_forwardCash flow identity. Use the data from the following financial statements in the popup window,. The company paid interest expense of $17,100 for 2017 and had an overall tax rate of 40% for 2017. Verify the cash flow identity: cash flow from assets = cash flow to creditors + cash flow to owners The cash flow from assets is $ (Round to the nearest dollar.)arrow_forwardThe Greek Connection had sales of $32.1 million and a cost of goods sold of $12.8 million in 2013. A simplified balance sheet for the firm appears below: a. Calculate The Greek Connection's net working capital in 2013. b. Calculate the cash conversion cycle of The Greek Connection in 2013. c. The industry average accounts receivable days is 30 days. What would have been the cash conversion cycle for The Greek Connection in 2013 had it met the industry average for accounts receivable days? (Hint: Use a 365-day year.) Assets Liabilities and Equity Cash $2,344 Accounts payable $1,600 Accounts receivable 4,155 Notes payable 1,000 Inventory 1,325 Accruals 1,220 Total current assets $7,824 Total current liabilities $3,820 Net plant, property, and equipment $8,500 Long-term debt $3,000 Total assets $16,324 Total liabilities $6,820 Common equity $9,504…arrow_forward
- What does a capital expenditure (in the investing activity cashflow sheet) of $53,900,000 tell us about a company?arrow_forwardAccountingarrow_forwardSuppose Valley Technology has the following results related to cash flows for 2022: Net Income of $7,100,000 Decrease in Accounts Payable of $200,000 Decrease in Accounts Receivable of $600,000 Increase in Inventory of $500,000 Assuming no other cash flow adjustments than those listed above, create a statement of cash flows with amounts in thousands. What is the Net Cash Flow from Operating Activities?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning