Solution Library

Calculation of Free Cash Flow From Balance Sheet And Income Statements

Question

Use the financial statements for Widget Corp and find the FCF.

Balance Sheets Widget Corp. (In Millions of Dollars) (Winter 2013)

Assets

2013

2012

Liabilities and Equity

2013

2012

Cash

$100

$80

Accounts Payable

$50

$40

Short-term Investments

10

10

Notes Payable

$200

$180

Accounts Receivable

$400

$380

Accruals

$190

$150

Inventories

$450

$490

Total Current Liabilities

$440

$370

Total Current Assets

$960

$960

 

 

 

Net Plant and Equipment

$1065

$965

Long-term Debt

$400

$650

 

 

 

Total Debt

$840

$1,020

 

 

 

Common Stock (50 mill)

$485

$500

 

 

 

Retained Earnings

$700

$405

 

 

 

Total Common Equity

$1,185

$905

Total Assets

$2,025

$1,925

Total Liabilities and Equity

$2,025

$1925



Income Statements Widget Corp (In Millions of Dollars) (Winter 2013)

 

2013

2012

Total Revenue

$4000

$3500

Operating Expenses

$3000

$2900

EBITDA

$1000

$600

Depreciation

$200

$170

Amortization

$100

$90

Depreciation and Amortization

$300

$260

EBIT (Operating Income)

$700

$340

Less Interest

$125

$115

EBT

$575

$225

Less Taxes (40%)

$230

$90

Net Income before preferred dividends

$345

$135

Preferred Dividends

$20

$20

Net Income

$325

$115

Common Dividends

$160

$110

Additions to Retained Earnings

$165

$5



Summary

The question belongs to Finance and it is about finding the FCF or Free Cash Flow from the balance sheet and income statements given in the question. The calculations have been given in the solution in detail.

Total Word Count 199

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