You are considering an investment in Cruise, Inc. and want to evaluate the firm\

Question

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 $202 million, paid taxes of $51 million, and its depreciation expense was $75 million. Cruise's gross fixed assets increased by $70 million from 2012 to 2013. The firm's current assets decreased by $10 million and spontaneous current liabilities increased by $6 million. What is Cruise's operating cash flow, investment in operating capital, and free cash flow for 2013, respectively, in millions?

Explanation / Answer

Particulars Amount Net profit as per profit and loss account 202 Less: taxes Paid 51 Add: Depreciation expense 75 Add: Decrease in current assets 10 Add: Increase in current liabilities 6 Cash flow from operations 242

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