1. A firm generated free cash flow of 2348 million and paid net interest of 23 million after tax. It paid a dividend of 14$ million and issued shares for 54 million. There were no share repurchases. What did the treasurer do with the remaining cash flow and for how much?
2. A firm generated a negative free cash flow of 1857 million, but the board of directors understanding that the firm was quite profitable maintained the dividend of $1.25 per share on the 840 million shares outstanding. The firm also paid 32 million in net interest (after tax). What are the responses open to the treasurer?
First, free cash flow is the cash flow available to the firm's "suppliers of capital after all operating expense (including taxes) have been paid and necessary investments in working capital and fixed capital have been made" (Stowe et al 2008, p. ...
This response discusses what a treasurer did with the remaining cash flow of a firm that had no share repurchases and also had generated a negative free cash flow.