Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
A stock market analyst has forecasted the following year-end numbers for Rebble Technology: Sales $ 70 million, EBITDA $20 million, Depreciation $ 7 million, Amortization $ 0
A stock market analyst has forecasted the following year-end numbers for Rebble Technology: Sales $ 70 million, EBITDA $20 million, Depreciation $ 7 million, Amortization $ 0. The company's tax rate is 40 percent. The company does not expect any changes in its net operating working capital. This year the company's planned gross capital expenditures will total $12 million. What is the company's forecasted free cash flow for the year? Interpret the findings. (5 Marks)
Expert Solution
Company's forecasted free cash flow for the year=
[(EBITDA-depreciation)×(1-0.40)]+Depreciation-Capital expenditure
=[($20 million-$7 million)×0.60]+$7 million-$12 million
=$13 million×0.60+$7 million-$12 million
=$7.8 million+$7 million-$12 million
=$2.8 million
Positive free cash flows indicates that the company is generating more cash than is used to run the company and reinvest to grow the business of the company.
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
