Calculate the firms net operating profit after taxes

Reference no: EM131533958

Assignment

Finding operating and free cash flows Consider the following balance sheets and selected data from the income statement of Keith Corporation.

Keith Corporation Balance Sheets
	December 31
Assets	2015		2014
Cash	$ 1,500		$ 1,000
Marketable securities	1,800		1,200
Accounts receivable	2,000		1,800
Inventories	2,900		2,800
Total current assets	$ 8,200		$ 6,800
Gross fixed assets	$29,500		$28,100
Less: Accumulated depreciation	14,700		13,100
Net fixed assets	$14,800		$15,000
Total assets	$23,000		$21,800
Liabilities and stockholders' equity
Accounts payable	$ 1,600		$ 1,500
Notes payable	2,800		2,200
Accruals	200		300
Total current liabilities	$ 4,600		$ 4,000
Long-term debt	5,000		5,000
Total liabilities	$ 9,600		$ 9,000
Common stock	$10,000		$10,000
Retained earnings	3,400		2,800
Total stockholders' equity	$13,400		$12,800
Total liabilities and stockholders' equity	$23,000		$21,800
Keith Corporation Income Statement Data (2015)
Depreciation expense		$1,600
Earnings before interest and taxes (EBIT)		2,700
Interest expense		367
Net profits after taxes		1,400
Tax rate		40%

a. Calculate the firm'snet operating profit after taxes (NOPAT)for the year ended December 31, 2015.

b. Calculate the firm'soperating cash flow(OCF) for the year ended December 31, 2015.

c. Calculate the firm'sfree cash flow(FCF) for the year ended December 31, 2015.

d. Interpret, compare, and contrast your cash flow estimates in parts b and c.

Reference no: EM131533958

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