Share
Explore BrainMass

Free Cash Flow (Practice Question, ABC Corp.)

FREE CASH FLOW

Estimate the free cash flow that ABC Corp earned in 2008 using the Income Statement and supplemental information below; show your calculations: Income Statement Sales 100 Cost of Sales (40) Gross Margin 60 Expenses Depreciation 10 Other Expenses 5.........(15) EBIT 45 Interest Expense (5) Earnings Before Taxes 40 Tax Provision (20) Earnings 20 SUPPLEMENTAL INFO Minimum Contractual Debt Service per Annum..........10 Average Annual Planned Investment in Equipment ....5 Cash flow from Operations (2008).................................40

Solution Preview

Answer:

Free cash flow = Cash flow from Operations - Capital expenditures
= 40 - 5
= 35

Net free cash ...

Solution Summary

This solution helps with estimating free cash flow. Income statement calculations for ABC Corp earned is determined.

$2.19