Given the information below for XYZ Corporation, compute the free cash flow for
ID: 2724644 • Letter: G
Question
Given the information below for XYZ Corporation, compute the free cash flow for 2007. Interpret your results.
Balance Sheet
2006 2007
Cash $ 9,000 $ 500
A/R 12,500 16,000
Inventories 29,000 45,500
Total Current Assets $50,500 $62,000
Land 20,000 26,000
Plant & Equipment 70,000 100,000
Less Accumulated Depreciation (28,000) (38,000)
Total Fixed Assets $62,000 $88,000
Total Assets $112,500 $150,000
Accounts Payable $ 6,500 $17,000
Accrued Expenses 4,000 5,000
Short Term Bank Notes 17,000 47,000
Total Current Liabilities $27,500 $69,000
Long-term Debt 28,750 22,950
Common Stock 31,500 31,500
Retained Earnings 24,750 26,650
Total Debt & Equity $112,500 $150,000
Income Statement 2007
Sales $ 160,000
COGS 96,000
Gross Profit $ 64,000
Operating Expenses
Fixed Cash Operating Expenses $ 21,000
Variable Operating Expenses 16,000
Depreciation 10,000
Total Operation Expenses $ 47,000
Earnings before Interest & Taxes (NOI) $ 17,000
Interest Expense 6,100
Earnings Before Taxes $ 10,900
Income Tax 3,900
Net Income $ 7,000
Explanation / Answer
Answer:
Free cash Flow=38500-36000 =2500
XYZ Corporation Statement of cash Flow Net income 7000 cash Flow from operating activities Depreciation 10000 Increase in accounts receivable -3500 Increase in inventory -16500 Increase in accounts payable 10500 Increase in accrued exp 1000 Increase in short term bank notes 30000 Net cash flow from operating activities 38500 Cash Flow From investing Activities: Purchase of land -6000 Purchase of plant and equipment -30000 Net cash used in investing activities -36000Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.