Last year SG Corporation had P5 million in operating income (EBIT). The company had a net depreciation expense of P1 million and an interest expense of P1 million; its corporate tax rate was 40%. The company has P14 million in operating current assets and P4 million in operating current liabilities; it has P15 million in net plant and equipment. It estimates that it has an after-tax cost of capital of 10%. Assume that SG's only noncash item was depreciation. If total net operating capital in the previous year was P24 million, what was the company’s free cash flow (FCF) for the year? Sample format: 1,111,111

Last year SG Corporation had P5 million in operating income (EBIT). The company had a net depreciation expense of P1 million and an interest expense of P1 million; its corporate tax rate was 40%. The company has P14 million in operating current assets and P4 million in operating current liabilities; it has P15 million in net plant and equipment. It estimates that it has an after-tax cost of capital of 10%. Assume that SG's only noncash item was depreciation. If total net operating capital in the previous year was P24 million, what was the company’s free cash flow (FCF) for the year? Sample format: 1,111,111

Name: Last year SG Corporation had P5 million in operating income (EBIT). Th
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Description: Last year SG Corporation had P5 million in operating income (EBIT). The company had a net depreciation expense of P1 million and an interest expense of P1 million; its corporate tax rate was 40%. The company has P14 million in operating current asset

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter2: Financial Statements, Cash Flow, And Taxes

Section: Chapter Questions

Problem 1STP

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Problem: Last year Cole Furnaces had $5 million in operating income (EBIT). The company had a net depreciation expense of $1 million and an interest expense of $1 million; its corporate tax rate was 40%. The company has $14 million in operating current assets and $4 million in operating current liabilities; it has $15 million in net plant and equipment. It estimates that it has an after-tax cost of capital of 10%. Assume that Cole’s only noncash item was depreciation. Calculate net operating working capital for the current year. Sample format: 11,111,111 Calculate total net operating capital for the current year. Sample format: 11,111,111 If total net operating capital in the previous year was $24 million, what was the company’s free cash flow (FCF) for the year? Sample format: 1,111,111
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