Abbreviated financial statements

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Abbreviated financial statements are given for Fletcher Corporation in the following table:

 

2019

2020

Revenues

$600.00

$690.00

Operating expenses

520

600

Depreciation

16

18

Earnings before interest and taxes

64

72

Less Interest Expense

5

5

Less: Taxes

23.6

26.8

Equals: Net income

35.4

40.2

Addendum: 

Yearend working capital

150

200

Principal repayment

25

25

Capital expenditures

20

10

Year end working capital in 2018 was $160 million and the firm's marginal tax rate is 40% in both 2019 and 2020. Estimate the following for 2019 and 2020:

a. Free cash flow to equity.

b. Free cash flow to the firm.

Reference no: EM133116194

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