The following information is derived from the financial records of Brown Company for the year ended December 31, 2004:
Sales
$3,400,000
Cost of Goods Sold (COGS)
(2,100,000)
Depreciation
(300,000)
Interest Paid
(200,000)
Gain on Sale of Old Equipment
400,000
Income Taxes Paid
(300,000)
Net Income
$900,000
Cash flow from operations less capital expenditures is:
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Brown’s cash flow from operations (CFO) was $800,000 = ($900,000 Net Income + $300,000 depreciation ? $400,000 gain).
Capital expenditure cash flows were ?$1,000,000 for the factory and $2,400,000 cash received from sale of the old equipment for a net inflow of cash of $1,400,000.
$2,200,000 = ($800,000 + $1,400,000).
[此贴子已经被作者于2011-3-21 11:25:02编辑过]
Free cash flow to the firm (FCFF) adjusts earnings before interest and taxes (EBIT) by:
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As presented in the reading: FCFF = EBIT (1 – tax rate) + Dep – FCInv – WCInv.
In computing free cash flow, the most significant non-cash expense is usually:
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Depreciation is usually the largest non-cash expense.
Which of the following items is NOT subtracted from the net income to calculate free cash flow to equity (FCFE)?
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Interest payments to bondholders are included in the income statement and are already subtracted to calculate net income.
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