Last year Rattner Robotics had $5 million in operating income (EBIT). The company had net depreciation expense of $1 million and interest expense of $1 million; its corporate tax rate was 40 percent. The company has $14 million in current assets and $4 million in non-interest-bearing current liabilities; it has $15 million in net plant and equipment. It estimates that it has an after-tax cost of capital of 10 percent. Assume that Rattner’s only non-cash item was depreciation.
a. What was the company’s net income for the year?
b. What was the company’s net cash flow?
c. What was the company’s net operating profit after taxes (NOPAT)?
d. What was the company’s operating cash flow?
e.If operating capital in the previous year was $24 million what was the company’s free cash flow (FCF) for the year?
f. What was the company’s Economic Value Added (EVA)?
financial management - marie, Friday, November 9, 2007 at 10:37pm
unsure, can someone please assist asap?
Thanks so much
financial management - Anonymous, Thursday, February 14, 2013 at 12:52pm
"I'm tempted to solve these for you, but I think you must do your homework for you to learn. I'll just give you these formulas to help you:
1. Net income = EBIT - (taxes + interest expense)
2. Cash Flow After Tax = Net income + Depreciation + amortization + non-cash charges
3. NOPAT = EBIT x (1 - Tax Rate)
4. Operating Cash Flow = EBIT + depreciation - taxes
5. Free cash flow = net income + amortization + depreciation - changes in working capital - capital expenses
*changes in working capital would be operating capital this year less the operating capital in the previous year.
6. EVA = NOPAT - (capital * cost of capital)"