Chapter 4, Problem 4.6P

a)

Summary Introduction

To calculate: Net operating profits after tax,.

b)

Summary Introduction

To calculate: Operating cash flow.

Introduction:

Operating cash flow is the measurement of the amount of cash that a firm generates by its normal business operation, which points to whether the firm can generate the adequate positive cash flow for the maintenance and growth of its operation or it needs any external financing.

c)

Summary Introduction

To calculate: Free cash flow.

Introduction:

Cash flow is the inflow and outflow of cash and capital in a business where, a positive cash flow implies rise in the liquid assets, return on capital to the shareholders and more whereas a negative cash flow includes decreasing in the firm’s liquid assets.

d)

Summary Introduction

To calculate: Interpreting cash flow.

Introduction:

Cash flow is the inflow and outflow of cash and capital in a business where, a positive cash flow implies rise in the liquid assets, return on capital to the shareholders and more whereas a negative cash flow includes decreasing in the firm’s liquid assets.