Scribd Logo
Upload

Welcome to Scribd!

  • 17 views

    03 Task Performance 1

    Uploaded by

    Stella Maris
    The company has an EBIT of P30 million and depreciation of P5 million. It pays taxes at a 40% rate. It will spend P10 million on new assets and P15 million to increase current assets. Accounts payable will rise P2 million, accruals by P3 million, and notes payable by P8 million. Calculating free cash flow as EBIT x (1 - tax rate) + depreciation - capital expenditures - net operating working capital equals -P5 million.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    03 Task Performance 1

    Uploaded by

    Stella Maris
    17 views2 pages
    The company has an EBIT of P30 million and depreciation of P5 million. It pays taxes at a 40% rate. It will spend P10 million on new assets and P15 million to increase current assets. Accounts payable will rise P2 million, accruals by P3 million, and notes payable by P8 million. Calculating free cash flow as EBIT x (1 - tax rate) + depreciation - capital expenditures - net operating working capital equals -P5 million.

    Original Description:

    Financial Management

    Original Title

    03_Task_Performance_1

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The company has an EBIT of P30 million and depreciation of P5 million. It pays taxes at a 40% rate. It will spend P10 million on new assets and P15 million to increase current assets. Accounts payable will rise P2 million, accruals by P3 million, and notes payable by P8 million. Calculating free cash flow as EBIT x (1 - tax rate) + depreciation - capital expenditures - net operating working capital equals -P5 million.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    17 views2 pages

    03 Task Performance 1

    Uploaded by

    Stella Maris
    The company has an EBIT of P30 million and depreciation of P5 million. It pays taxes at a 40% rate. It will spend P10 million on new assets and P15 million to increase current assets. Accounts payable will rise P2 million, accruals by P3 million, and notes payable by P8 million. Calculating free cash flow as EBIT x (1 - tax rate) + depreciation - capital expenditures - net operating working capital equals -P5 million.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Ando, Aira Marielle B.

    BSBA - 4A

    Free cash Flow

    A company has an EBIT of P30,000,000, depreciation of P5,000,000, and a 40%


    tax rate. I needs to spend P10, 000,000 on new fixed assets and P15, 000,000 to
    increase its current assets. It expects its accounts payable to increase by P2,
    000,000, its accruals to increase by P3, 000,000, and its notes payable to increase
    by P8, 000,000. The firm’s current liabilities consist of only accounts payable,
    accruals, and notes payable. What is the company’s free cash flow?

    EBIT P30,000,000
    Tax 40%
    Depreciation 5,000,000
    Fixed Asset 10,000,000
    Current assets 15,000,000
    Accounts 2,000,000
    Payable
    Accruals 3,000,000
    Notes Payable 8,000,000

    Formula:
    Free Cash Flow = [EBIT (1-T) + Depreciation and Amortization] – [Capital
    Expenditures + Net Operating Capital]

    NOWC= Current Asset – Current Liabilities - Notes Payable

    Solution:
    FCF = [P30,000,000 (1 - 0.40) + 5,000,000] - [10,000,000 + 15,000,000 -
    (5,000,000 - 8,000,000)]

    = [P30,000,000 (0.60) +5,000,000] - [10,000,000 + 15,000,000 - (-


    3,000,000)]

    = [P18,000,000 + 5,000,000] – [10,000,000 + 18,000,000]


    = [P23,000,000 – 28,000,000]
    = -P5,000,000

    NOWC = [P15,000,000 - 5,000,000 - 8,000,000]


    = P2,000,000

    Answer:
    Free Cash Flow = -P5, 000,000

    You might also like