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    free cash flow

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    An analyst prepared reformulated balance sheets for the yeas 2007 and 2006 as follows (in millions of dollars) :

    ________________________2007_________________2006_______

    Operating assets $640 $590
    Financial assets $250 $110
    ----- ------
    $890 $700
    ----- -----
    ----- -----
    Finncial debt 170 130
    Operating liabilities 20 30
    Common equity 700 540
    ---- ----
    $890 $700
    ---- ---- --- ----

    The firm rported $100 million in comprehensive income for 2007 and no net financial income or expense.

    a) Calculate the free cash flow for 2007? ( answer must be $40 million )

    b) How was the free cash flow disposed of? ( open-ended answer )

    c) How can a firm with financial assets and financial liabilities have zero net financial income or expense ? ( open-ended answer )

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    https://brainmass.com/economics/income-distribution/free-cash-flow-251978

    Solution Preview

    Dear Student,

    Thank you for using BM.
    Below are my answers.

    ANSWERS
    Question a
    Comprehensive income: 100 million
    Less: Decrease in operating liabilities: (10 million)
    Increase in operating ...

    Solution Summary

    This solution calculates free cash flow.

    $2.19

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