Financial Reporting Problem someone, reported, question, following, understand

baldmice

Hi, I can't understand the following question. Hope someone share your thoughts. Thanks.

The EP Co. had cash flow from operations of $30 million. EP reported the following:

(In Million)
                                                                       2000                     2001
Property, Plant, and Equipment (gross)                $100                     $110
Less accumulated depreciation                               60                        65
Property, Plant, and Equipment (net)                      40                        45

What is EP's free cash flow for the period?
A $20
B $40
C $35
D $30

The answer is B. Why?

290037082

because when we doing sth about the cash flow, we do not count the depreciation

so it is 10 million only

[此贴子已经被作者于2009-5-7 13:17:33编辑过]

baldmice

QUOTE:

以下是引用290037082在2009-5-7 2:08:00的发言：

because when we doing sth about the cash flow, we do not count the depreciation

so it is 10 million only

[此贴子已经被作者于2009-5-7 2:08:26编辑过]

I am sorry, but still confused...
The 30 million is not net income. It is operation cash flow, which does not include the depreciation. So what justifies the additional 10 million?

290037082

Free cash flow: after-tax before interest cash flow from operation minus new investment.

 

free cash flow is not from net income.

[此贴子已经被作者于2009-5-7 12:22:01编辑过]