Free Cash Flow Estimation Assignment
February 19th, 2020
Free Cash Flow estimation. Fill in the blanks and complete the formula. Do not use thousand separators. (e.g., 2000)
Pro Forma Statement (in 000s)
Item | 2018 Actual | 2019 Pro Forma |
unit sales | 400 | 800 |
unit price | 5 | 5 |
unit variable cost of goods sold | 1 | 1 |
Sales | 2000 | |
COGS (fixed) | 500 | |
COGS (variable) | 400 | |
Gross profit | 1100 | |
Selling and shipping expenses (variable) | 100 | |
Gen. admin. expenses (fixed) | 200 | |
Depreciation (fixed) | 100 | |
Lease expense (fixed) | 40 | |
total operating expenses | 440 | |
Operating profit (EBIT) | 660 |
Suppose the tax rate (T) is 25%, and the required fixed capital investment is 200 and the required working capital investment is 40.
Free cash flow (FCF) = EBIT(1-T) – required fixed capital investment – required working capital investment.
FCF = (1 – %) – – = Get Finance homework help today