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Homework answers / question archive / Q1: The following is information related to Nablus Corporation: 2018 2019 Total Current Assets $6,800 $8,200 Gross Fixed Assets 15,000 14,800 Accounts Payable 1,500 1,600 Accruals 300 200 Depreciation Expense 1500 1,600 EBIT 2,700 Interest Expense 367 Net Profits After Taxes 1,400 Tax Rate 40% 1
Q1: The following is information related to Nablus Corporation: 2018 2019 Total Current Assets $6,800 $8,200 Gross Fixed Assets 15,000 14,800 Accounts Payable 1,500 1,600 Accruals 300 200 Depreciation Expense 1500 1,600 EBIT 2,700 Interest Expense 367 Net Profits After Taxes 1,400 Tax Rate 40% 1. Calculate the operating cash flow (OCF) for 2019. (2 pts) 2. Calculate the free cash flow (FCF) for 2019. (3 pts)
| Operating Cash flow for 2019 | |
| Net Income | 2700 |
| (+) Depreciation | 1600 |
| (+) Increase in Accounts payable | 100 |
| (+) Provison for tax | 933 |
| (-) Increase in current assets | -1400 |
| (-) Decrease in Accruals | -100 |
| OCF | 3833 |
| Free cash flows represents the cash a company generates after accounting for cash outflows to support opeartions and maintain its capital assets. | |
| The formulae to compute FCF = Operating Cash flow - Capital expenditure | |
|
Capital Expenditure = Change in Fixed Assets + Depreciation for current year. = 200 + 1600 = 1800 |
|
| Free cash flows for 2019 | |
| Operating Cash flow | 3833 |
| (-) Capital Expenditure | -1800 |
| FCF | 2033 |
