Free Cash Flow You are considering an investment in Cruise, Inc. and want to eva

Question

Free Cash Flow You are considering an investment in Cruise, Inc. and want to evaluate the firm's free cash flow. From the income statement, you see that Cruise earned an EBIT of $206 million, paid taxes of $32 million, and its depreciation expense was $56 million. Cruise's gross fixed assets increased by $89 million from 2007 to 2008. The firm's current assets decreased by $29 million and spontaneous current liabilities increased by $7.9 million. What is Cruise's operating cash flow, investment in operating capital and free cash flow for 2008, respectively in millions?

Explanation / Answer

Earnings before interest and taxes $ 206.00 Profit before taxes $ 206.00 Less: Tax@35% $    32.00 Net income $ 174.00 Add: depreciation $    56.00 Operating cash flows $ 230.00 Less: Net capital expenditure $    89.00 Add: Net Decrease in working capital $    36.90 Free cash flows to Firm (FCFF) $ 177.90

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.